Expert says rates could see more ups and downs due to global tensions
Mortgage rates have hit a pause after a steady decline, as the latest report from Freddie Mac showed a slight uptick in the 30-year fixed-rate mortgage.
The average rate now sits at 6.12%, up from 6.08% last week. A year ago, it stood at 7.49%. The 15-year fixed-rate mortgage also saw a slight increase, averaging 5.25%, compared to last week’s 5.16% and 6.78% this time last year.
Freddie Mac chief economist Sam Khater attributed the stall to a mix of factors, including rising geopolitical tensions and a rebound in short-term rates.
“The decline in mortgage rates has stalled due to a mix of escalating geopolitical tensions and a rebound in short-term rates that indicate the market’s enthusiasm on rate cuts was premature,” Khater said.
Despite the recent rise in rates, optimism remains. Bob Broeksmit, president and CEO of the Mortgage Bankers Association, noted that the current mortgage rates, although up slightly, are still down significantly from the opening months of 2024.
“Mortgage rates increased slightly last week for the first time in two months but remain much lower than earlier this year,” said Broeksmit. “These lower mortgage rates – along with rising inventory levels – are giving potential buyers more confidence to enter the market. Purchase activity increased last week and was up more than 9% from one year ago.”
Khater also noted that the broader market conditions remain favorable for homebuyers.
“Zooming out to the bigger picture, mortgage rates have declined one and a half percentage points over the last 12 months, home price growth is slowing, inventory is increasing, and incomes continue to rise,” he said in the latest PMMS report. “As a result, the backdrop for homebuyers this fall is improving and should continue through the rest of the year.”
However, NerdWallet mortgage expert Kate Wood said this rate volatility could continue.
“With the Federal Reserve's September meeting in the rearview, mortgage rates began October needing direction. What they got was more uncertainty,” Wood said.
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Like Khater, she also pointed to factors like the recent jobs report and geopolitical tensions, which have created volatility.
“On one hand, Tuesday's jobs report seemed to argue for a steady course, with the labor market more or less headed toward the Fed's desired destination,” Wood added. “But on the other hand, headlines about upheaval in the Middle East were enough to trigger a brief flight to safety — traders looking to the relative surety of investments like bonds — which pushed rates lower.
“We could be in for a few bumps before mortgage rates settle on a route.”
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