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What is really happening with mortgage rates?

Feeling a little unsure about what's really happening with mortgage rates? That could be because you've heard someone say they're going down.

But then you read somewhere else that they have gone up again. And that can leave you scratching your head and wondering what's true.

The simplest answer is: that what you read or hear will vary depending on the time period you are viewing. Below is some information that may help clear up the confusion.

Mortgage rates are volatile by nature.

Mortgage rates do not move in a straight line. There are too many factors at play for that to happen. Instead, rates bounce because they are affected by things like economic conditions, Federal Reserve decisions, and much more. That means they could go up one day and down the next depending on what's happening in the economy and the world as a whole.

Take a look at the chart below. It uses data from Mortgage News Daily to show the ebbs and flows in the 30-year fixed mortgage rate since last October:

If you look at the graph, you will see many peaks and valleys, some larger than others. And when you use data like this to explain what's happening, the story can be different depending on the two points on the graph you're comparing.

For example, if you just look from the beginning of this month to now, you might think that mortgage rates are going back up. But, if you look at the most recent data and compare it to the October peak, rates have been trending downward. So what is the correct way to look at it?

The panorama

Mortgage rates are always going to bounce. This is how they work. Therefore, you should not focus too much on small daily changes. Instead, to really understand the overall trend, zoom out and look at the big picture.

When you look at the high point (October) compared to current rates, you can see that they are down compared to last year. And if you're thinking about buying a home, this is great news. Don't let small problems distract you. Experts generally agree that the downward trend could continue this year.

Bottom line

Contact a professional if you have any questions about what you are reading or hearing about the real estate market.


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