Mortgage rates lowered Monday in the wake of Silicon Valley Bank’s collapse which has shaken markets. According to the latest Mortgage News Daily quote, the average 30-year mortgage rate dropped to 6.57%. That’s down from 6.76% on Friday when SVB failed and 7% on Thursday when the bank’s stock got hammered. The rate tracks the 10-year Treasury yield, which has fallen around 30 basis points since Wednesday’s close as investors bet the unfolding chaos could convince the Federal Reserve to slow down its interest-rate hiking campaign.
The surprise drop in rates could offer an opening for weary homebuyers and homeowners who have been waiting for an opportunity to lock in a lower rate, but housing experts remain unsure about how long the dip will last.
In case you missed The New York Times informative article titled “Federal Reserve’s Path Is Murkier After Bank Blowup” posted March 13th, 2022, here are a few excerpts that are important for homebuyers and homeowners to be aware of:
“The Federal Reserve’s hotly anticipated March 22 interest rate decision is just a week and a half away, and the drama that swept the banking and financial sector over the weekend is drastically shaking up expectations for what the central bank will deliver.
The Fed had been raising interest rates rapidly to try to contain the most painful burst of inflation since the 1980s, lifting them to above 4.5 percent from near zero a year ago. Concern about rapid inflation prompted the central bank to make four consecutive 0.75-point increases last year before slowing to a half point in December and a quarter point in February.
Before this weekend, investors believed there was a substantial chance that the Fed would make a half-point increase at its meeting next week. That step up was seen as an option because job growth and consumer spending have proved surprisingly resilient to higher rates — prompting Jerome H. Powell, the Fed chair, to signal just last week that the Fed would consider a bigger move.
But investors and economists no longer see that as a likely possibility.
Three notable banks have failed in the past week alone as Fed interest rate increases ricochet through the technology sector and cryptocurrency markets and upend even usually staid bank business models.“
“Goldman Sachs economists no longer expect a rate move at all. While Goldman analysts still think the Fed will raise rates to above 5.25 percent this year, they wrote on Sunday evening that they ‘see considerable uncertainty’ about the path.”
This all can definitely be overwhelming to any homebuyer, please, never hesitate to reach out with any real estate or mortgage questions. The Sibbach Team understands that buying and owning a home is a substantial investment. We want to do all we can so you are confident with all of your real estate decisions. 480-500-1738