Why Mortgage Rates May Stay Where They Are
What Treasury yields are telling us about housing right now.
Most people think mortgage rates follow the Federal Reserve.
In reality, they follow the bond market.
And right now, the bond market is sending a pretty clear signal: we may not see the rate cuts many buyers and sellers are hoping for anytime soon.
Two recent articles caught my attention, not because of the politics surrounding it, but because of what bond traders are actually doing.
Traders are no longer fully pricing in a fed rate cut this year
Trump urges Powell to cut rate immediately as bond traders scale back fed easing
The takeaway from the markets is simple: traders are scaling back expectations for Federal Reserve rate cuts this year. In some cases, markets that once expected two cuts are now pricing in one, or possibly none.
That matters for housing because mortgage rates are heavily tied to the 10-year Treasury yield, not the Fed’s short-term rate.
When bond yields rise, mortgage rates tend to rise with them.
And recently, that’s exactly what we’ve been seeing.
Mortgage rates have drifted back toward roughly the same range we’ve been stuck in for a while, around the low-to-mid 6% range nationally.
The rate you see is the rate you will likely get for the rest of the year.
Curious what others are seeing in the market.