Mortgage outlook: June rates could rise if the bond market acts | Immovable







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June Mortgage Rate Forecast

I predict mortgage rates will rise in June by less than a quarter of a percentage point. The month started with a 30-year fixed rate mortgage averaging 3.03%, so my forecast is that the 30-year-old will end the month at 3.28% or less.

Most of the increase will occur in the second half of the month, following the June 15-16 meeting of the Federal Reserve’s Monetary Policy Committee. The Fed is likely to recognize the inevitable: that 2021 could be the year it begins to pull out of its easy money policies.

Trying to avoid a temper tantrum

The Fed has already reminded everyone that it will start tightening someday, so a policy change shouldn’t come as a shock to the system. If bond investors overreact anyway, their explosion will manifest as reluctance to buy mortgage bonds. By putting their noses on mortgage bonds, they would put upward pressure on mortgage rates.

The central bank found itself at a similar crossroads eight years ago. Back then, the Fed was doing what it is doing now: buying mortgage bonds to keep rates low and keep mortgage money afloat. In a press conference after the June 2013 monetary policy meeting, then Fed Chairman Ben Bernanke said “it would be appropriate” to start cutting back on his monthly mortgage bond purchases. later in the year.


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