Mortgage Interest Rates Forecast

Holden Lewis
By Holden Lewis 
Updated
Edited by Mary Makarushka

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Mortgage rates this week

Fixed mortgage rates went up sharply in the week ending March 21, even as the Federal Reserve implied that relief will come sometime this year.

  • The 30-year fixed-rate mortgage averaged 6.84% APR, up 18 basis points from the previous week's average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.

  • The 15-year fixed-rate mortgage averaged 6.16% APR, up 19 basis points from the previous week's average.

  • The 5-year adjustable-rate mortgage averaged 7.82% APR, down three basis points from the previous week's average.

The week's rise in rates was a hangover from February's inflation report. The core consumer price index — a gauge of prices excluding food and energy — went up 3.8% in one year. That was slightly higher than pundits had forecast.

Mortgage rates are sensitive to inflation, and those on fixed-rate loans have risen nearly every day since February's CPI report was released March 12, pushing up the average for the week. The steady increase in rates reflects some anxiety in the markets.

The Fed addressed that anxiety March 20, when the central bank kept short-term interest rates unchanged in its effort to get inflation under control. "We are fully committed to returning inflation to our 2% goal," Fed Chairman Jerome Powell said in a news conference.

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The Fed's monetary policymakers indicated that they expect to cut short-term interest rates this year. They didn't say when they will reduce rates, but futures traders are betting that the first Fed decrease will happen in the middle of June or the end of July.

"The Fed’s announcement that it is holding interest rates steady for now was not unexpected, but it does mean that mortgage rates are going to remain higher for longer," said Lisa Sturtevant, chief economist for Bright MLS, in a news release. Bright MLS is a multiple listing service, or database of properties for sale, in the mid-Atlantic states.

Even if Sturtevant is right and mortgage rates remain elevated, that doesn't necessarily mean that they'll go much higher. By implying that rate cuts are coming in a few months, the Fed might prevent rates from rising substantially between now and then.

Whatever happens with rates, home buyers can give themselves peace of mind by locking a mortgage rate that they're comfortable with.

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March mortgage rates forecast

Mortgage rates are likely to remain relatively unchanged in March. A decisive drop in rates probably won't happen until the Federal Reserve signals that it's satisfied that inflation is headed toward the central bank's goal of 2%.

What other forecasters say

Forecasters from mortgage securitizer Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors expect mortgage rates to fall to around 6% late this year.

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