Latest Mortgage Market News, March 2023
Hey there! February wasn’t a great month for people who want to buy a house. The average 30-year mortgage rate has gone up by almost 1%. This means that a lot of the improvement we saw in mortgage rates since October last year has disappeared. :(
You may be wondering why this is happening. Well, a few things have been going on that have made the market worried that the Federal Reserve (the "Fed") will raise interest rates and keep them high for a long time. These things include:
A really good jobs report in January (although some of the numbers were adjusted to make them look better)
Higher-than-expected inflation in January
Much better retail sales than expected in January
A positive reading in a survey of purchasing managers (which is a good sign for the economy)
Fed members making public comments suggesting that they might raise interest rates
Bond markets (which are related to mortgage rates) selling off in Europe and other places
You might be wondering whether this is a sensible reaction or an overreaction. The truth is, the bond market (which affects mortgage rates) reacts to headlines, and the headlines lately haven't been great for bond prices. But if you look beyond the headlines, there are some things that might make you feel better. For example, there's some statistical trickery going on that makes inflation look worse than it really is. And behind the scenes, there are signs that the economy might not be doing as well as it seems, which could mean that inflation will cool down in the future.
The next Federal Open Market Committee meeting is set to take place March 21/22. Stay tuned for a future blog post discussing the Feds’ next steps.