Today's Mortgage Rates - 03/27/2023

Mortgage rates have moved lower again, but markets remain highly volatile and there's little indication that they will perch at present levels for very long.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage declined by another 18 basis points (0.18%) to 6.42%, but the yields that underpin mortgage rates are bouncing up and down in wide swings of late.

Conforming fifteen-year FRMs saw a larger decrease, with the average offered rate for the most common shorter-term mortgage easing by 22 basis points (0.022) and slipping back to 5.68%. Both 30- and 15-year fixed-rate mortgage rates are about where they were toward the end of February.

Freddie Mac's legacy rate survey -- now slated to run though the end of 2023 -- showed that the average initial fixed rate for a hybrid 5/1 ARM slumped hard, posting a decline of 60 basis points (0.60%) and falling all the wan back down to 5.55%. This re-widened the rate spread between the most popular ARM and the most popular fixed-rate mortgage to 87 basis points, enough to entice at least some homebuyers looking for a lower cost alternative as they shop the housing market this spring.

With financial markets roiling, the Federal Reserve met this week to decide what, if anything should be done in terms of monetary policy. Recent banking failures raise new risks to the economy, but inflation still a serious concern, and the Fed had a choice between forceful action on rates or making no move at all. In the end, they opted for a quarter-point increase in the federal funds rate, and signaled that more increases may or may not come, depending on incoming data and the fallout of banking stresses on the economy.

The FOMC's Summary of Economic Projections -- the Fed's own forward outlook -- suggests that another quarter-point move in rates may yet come, but investors in futures markets are placing bets such a move isn't a certainty and that the Fed will be cutting rates starting later this year. Of course, these are only speculators putting money behind their hunches and not a guarantee of what may come. Based upon the comments Fed Chair Powell made at the post-meeting press conference, it's not likely that the Fed is very sure what may come in the months ahead.

As we noted here last week, it's very important to remember that mortgages aren't Treasurys; that is, during times of market stress, money may rush into the safe haven of Treasury bonds, but it's not as though investors are rushing to buy mortgages or mortgage bonds. While wide swings up or down in Treasury yields have some influence on the direction of mortgage rates, it's by no means a lockstep, one-for-one relationship.

Unsettled markets remain the order of the day, and the influential yield on the 10-year Treasury is currently about in the middle of the range it has held this week. Mortgage rates seem tentatively stable at present levels -- the lowest in a month -- but will struggle to hold still for very long in this kind of climate.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.