If you’ve been keeping an eye on mortgage rates, there’s some encouraging news this week.
After two strong days in the bond market, mortgage rates have improved and are currently sitting at their best levels in about six weeks. While rates continue to change daily, this recent movement is a welcome sign for buyers who have been waiting for an opportunity to enter the market.
What’s Driving the Change?
One factor helping financial markets is growing optimism surrounding the recent 60-day peace agreement between Iran and Israel. As negotiations continue without major setbacks, investors are becoming more confident that tensions may continue to ease.
The agreement also includes the lifting of certain sanctions on Iranian oil exports. As more oil enters the global market over time, increased supply could help keep energy prices lower.
Why does that matter?
Lower energy costs can help reduce inflation over time. When inflation begins to cool, it may lessen the need for higher interest rates, which is generally positive for mortgage rates.
Oil prices have already fallen to around $70 per barrel—the lowest level since the conflict began.
Inflation Is Still Something to Watch
While recent market news has been positive, inflation remains one of the biggest factors influencing mortgage rates.
The Federal Reserve’s preferred inflation measure, Core Personal Consumption Expenditures (Core PCE), was released this week and came in as economists expected. However, inflation remains elevated, and Federal Reserve officials continue to emphasize that bringing inflation under control remains a priority.
It will likely take time before lower oil prices work their way through the broader economy, so it’s too early to know how much impact they will have on future inflation readings.
What Does This Mean for Homebuyers?
The recent improvement in mortgage rates is certainly encouraging, but markets can change quickly. If you’re thinking about buying a home, it’s important to understand your options and obtain a pre-approval before you start shopping for a home.
Getting pre-approved now allows you to:
- Understand your buying power.
- Lock in a favorable rate
- Be ready to make an offer as soon as you find the right home.
No one can predict exactly where rates will go next, but staying informed and prepared can help you make confident decisions.
For informational purposes only. Mortgage rates change daily and are subject to market conditions. This is not a commitment to lend. All mortgage loan applications are subject to underwriting and program guidelines.
by: Shayan Salahuddin
Chief Strategy Officer
Integrity Home Mortgage Corporation.
Shayan Salahuddin is Chief Strategy Officer at Integrity Home Mortgage Corporation and is a career mortgage professional. For nearly 25 years Shayan has accumulated vast expertise in strategy, capital markets, operations, and technology implementation across the mortgage industry, from independent mortgage lenders to some of the biggest names in the business.