In September, the Federal Reserve reduced its interest rate for the first time since 2020, giving hope to potential buyers that mortgage rates would follow.
But instead of decreasing, real estate loan costs have walked above.
Thursday, the mortgage giant Freddie Mac said that the average rate on a 30 -year -old mortgage increased to 6.72%, against 6.54% a week earlier. It was the fifth consecutive week of increase.
“People are confused,” said Jeff Lazerson, president of mortgage education in Laguna Niguel. “They say” What's going on? ” »»
The fact that mortgage rates have increased despite the reduction in underlines that, although the federal reserve influences mortgage rates, it does not establish them.
Instead, rates are determined by what institutional investors buy mortgage beams are ready to pay them and various factors influence these investors.
One is the reference rate that the Fed reduced in September, which establishes a floor on borrowing costs throughout the economy. Another is inflation expectations. Indeed, when purchasing mortgages of 30 years, investors do not want to see the value of their investment gnawed as walked.
Mortgage rates have dropped before Fed decision In September, because investors at the cost of waiting, the Fed would be able to reduce because inflation had released.
Experts said one of the main reasons why rates increased since economic data has become stronger than expected. It is convinced that investors' inflation will remain higher longer and the Fed will not be able to reduce rates as much as they could have otherwise. Likewise, if the labor market is stronger, it is less necessary to reduce rates to stimulate growth.
“You see many positive economic surprises,” said Kara Ng, Zillow economist, who cited a Solid job reports In September as an example.
Friday, the Labor Department released October figures This has shown that employment growth has slowed down last month. However, these figures were aggravated by hurricanes and a large strike in Boeing which temporarily eliminated the payroll workers. The unemployment rate has remained the same.
Political factors could increase higher mortgage rates and presidential electoral polls have tightened in recent weeks.
Chen Zhao, an economist of Real Estate Brokerage Redfin, said that he seems that investors are increasingly believing that former President Trump would have the best vice-president Kamala Harris and resumes the White House.
According to a recent survey From the Wall Street Journal, most economists predict that inflation and interest rates would be higher under the policies proposed by Trump, which, among other measures, called to sweep the prices on imported goods.
“The link between prices and inflation is simply very austere,” said Zhao. “There is not much controversy there.”
As rates increase, house buyers Feel the pinch.
Lazerson, Orange County Mortgage Broker, said that he had seen slow affairs at a “runoff” after an initial burst when the rates dropped around the Fed's announcement.
The reason is simple mathematics.
When the prices reached their recent background of 6.08% in September, the monthly capital and the payment of interest on a house of $ 800,000 would have been $ 3,870. It's now $ 4,138.
According to the weekly Freddie Mac survey, rates are still less than 7%, a level seen for the last time in May. However, a daily tracker of Mortgage dailPut them above this threshold.
Zhao said that what will happen with rates that then depends on various factors, especially which wins the election and the policies they really put.
If there is no change in policy, it would expect mortgage rates to drop next year because inflation is softening. THURSDAY, an inflation measurement Looked closely by the federal reserve that has fallen at almost pre-pale levels.
Despite this, economists say that borrowers should not expect mortgage rates from the pandemic era of 3% and less. These rates were the by-product of a massive federal effort to revive an economy where unemployment The touch levels were observed for the last time in the Great Depression.
“We are talking about (mortgage rate in) High Fives, low bass,” said Zhao. “If President Trump wins, there is certainly much more risks than rates are higher.”
