Key facts
- Thirty-year conforming mortgage rates remained at 7.63% on Tuesday.
- FHA 30-year loan rates averaged 7.37%, down from 7.59% last week.
- Jumbo 30-year loan rates declined to 7.75% week over week.
- Demand for assumable mortgages has grown 60% year over year.
- Experts predict meaningful mortgage rate relief may come gradually through 2027.
Mortgage rates for 30-year conforming loans held steady at 7.63% on Tuesday, according to HousingWire's Mortgage Rates Center. While rates for FHA and jumbo loans saw slight decreases, overall borrowing costs remain elevated due to persistent inflation concerns and rising Treasury yields.
Industry experts attribute the sustained high rates to a combination of inflationary pressures, federal debt, and competition for investor capital. Selma Hepp, chief economist at Cotality, emphasized that long-dated Treasury yields, which serve as the benchmark for mortgage pricing, are the primary driver, rather than Federal Reserve policy.
David Temko, president and CEO of C2 Financial, noted that a strong economy coupled with rising energy costs fuels inflation and keeps the Federal Reserve in a hawkish stance, pushing rates higher. He added that investors require higher compensation for the volatility in mortgage bonds, necessitating cooler inflation and a steadier bond market for rates to decline.
In response to high rates, some buyers are exploring alternative financing options like assumable mortgages. Andy Taylor, founder and CEO of RetroRate, stated that approximately one in ten homes with a mortgage has an assumable loan, potentially offering rates between 3% and 5%. Demand for these loans has increased by 60% year over year, though awareness remains a barrier.
Melissa Cohn, regional vice president at William Raveis Mortgage, linked the surge in 10-year Treasury yields to higher oil prices, inflation, and national debt. She suggested that a drop in the core PCE index below 3%, stabilization of oil prices, and a softer labor market are necessary for rates to decrease. Kevin Watson, regional manager at Churchill Mortgage, also cited the war in Iran and rising oil prices as key inflationary pressures, impacting nearly all goods and services. He also pointed to rapid stock price growth in the AI sector as a contributing factor.
Marc Halpern, CEO of Foundation Mortgage, anticipates that meaningful relief in mortgage rates will arrive gradually through 2027, contingent on sustained inflation improvement, Treasury yields, and Federal Reserve policy. He advised buyers to focus on affordability today and consider refinancing if rates decline later. Mike Nielsen, a home loan specialist at Churchill Mortgage, indicated that even if inflation cools to the Fed's target, rates might only return to the 6% range, with rates significantly below 6% requiring a substantial economic downturn.