Posted On May 23, 2017
Mortgage rates are reflective of the economic atmosphere. When the Federal Open Market Committee (FOMC) raises the benchmark interest rate, mortgage rates tend to follow. Other events like politics can influence the economy as well. After dropping last week, amidst turmoil in Washington, Freddie Mac Chief Economist Sean Becketti predicts rates will remain low.
According to last week’s Freddie Mac survey, the average 30-year fixed-rate mortgage held around 4%, up about half of a percentage point from last year’s average weekly rate. The survey was conducted before the selloff that occurred Wednesday following the appointment of former FBI Director Robert Mueller to be a special counsel overseeing alleged Russian interference in the 2016 election. Due to this sudden dive, next week’s survey may reveal even lower rates.
“This week’s survey closed prior to Wednesday’s flight to quality,” Becketti said in a statement. “The delayed impact of the associated decline in Treasury yields may push mortgage rates lower in next week’s survey.”
Earlier this month, rates reached year-long lows and the FOMC voted to leave the benchmark interest rate unchanged. These economic conditions plus the recent political uncertainty may benefit the bond market as investors avoid volatility.