Why mortgage rates rose after initially falling

Well, if you are thinking about buying a home and you cannot help but compulsively check mortgage rates, you may feel a bit like a bouncing ball right now. That's right. Take a look at this. The rate for a 30-year loan ticked up about 6.2%, and this is after rates fell to a two-year low in the last month, but they're still much lower than their peak of roughly 8% about a year ago. Let's bring in Mark Hamrick. He is the Washington Bureau Chief and Senior Economic Analyst at Bankrate. So Mark, mortgage rates had been reliably falling. We saw the Fed cut rates, but now they're taking back up. Explain to our viewers what's going on. Yeah, it's just a slight increase, Errol and Lana, but enough to aggravate people who were wishing for something more substantial in the form of a drop to lower ground. So as you said, we really saw a big spike in mortgage rates over the previous several years where we're around the 3% level in early 2021, and of course we had inflation, the Federal Reserve hiking interest rates, and the reality is that there is not a tight relationship or correlation between the Federal Reserve's benchmark rate and what we see with mortgage rates. They are more in line with the yield of the 10-year Treasury. That's just a way of saying to people that we're following a lot of attention, paying a lot of attention to the Federal Reserve's rate moves, but that's not a guarantee that mortgage rates are going to be moving down dramatically. So yeah, it's a little give back here, but the trend is in place in the near term for them to go somewhat lower. Mark, that's a great point because these two different rates aren't tied at the hip. There's other things at play, but we are expecting rates to continue to come down. So for those people who do keep pressing refresh on the rates online and they're looking for an opportunity, when might we see mortgage rates drop? I would just say that it's expected that they will continue to move slightly lower over the next 12 to 14 months, and that really assumes a lot. It assumes that we don't have a resumption of inflation. It assumes that the U.S. economy basically is stable over that period, and we know we live in a time of a high degree of uncertainty. All we need to do is look over the rearview mirror at what we experienced over the last several years, not to mention a couple of wars. So what I would say is people should be patient. But the other part of this, Errol, is that affordability isn't only a function of the down payment and the monthly payments. It's also a function of the total cost of ownership. And so we've been sort of harping for years at Bankrate that more Americans need to be attentive to the need to save for emergencies. Unfortunately, I guess, you know, it's the good and the bad. Once one moves over that threshold for the very first time, that becomes an opportunity, almost a necessity, to have to spend on other things. We still have reasonably high interest rates in terms of yields on things like high-yield savings accounts. So I'd like to see people continuing to save and go to the Bankrate site and look at the mortgage calculator, see what you can afford, and think about the fact you have to make all of your financial goals work together, saving for emergencies, save for retirement, pay down debt, and yes, homeownership still regarded as part of the American dream. All right. Mark Hamrick, thank you.