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Thursday, March 23, 2023

Mortgage rates fluctuate heavily in June

by Holden Lewis | NerdWallet.com

Mortgage rates can be volatile in June. One of those graphs may resemble the biting part of a handsaw, with sharp daily fluctuations. I anticipate that the average rate on a 30-year mortgage will be higher in the last week of June than the last week of May.

I am not filled with confidence in this forecast. One source of uncertainty arises in the middle of the month, when the Federal Reserve meets to hash out monetary policy. By the end of May, financial markets were expecting the Fed to raise the federal funds rate by half a percent overnight on June 15.

Experience tells you that when the Fed raises short-term interest rates, long-term mortgage rates will also increase. But when the stock market beats (which happened in May), that tends to lower mortgage rates. What if investors worry that the Fed’s aggressive rate hike will soon lead to a recession? In that case, mortgage rates may not rise much, or they may even fall.

In short: Mortgage rates may rise in June, but that’s not a sure thing. Meanwhile, we could see enough bumps and falls from day to day.

exit rates

Mortgage rates were relatively calm from autumn 2020 to mid-December 2021. A graph of rates during that period would be a more or less straight line with small shaking from day to day and week to week.

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