Mortgage rates are on a bit of a downward trend, with the average rate on a 30-year fixed mortgage dropping from the 6.9% range in early February to around 6.7% this week. But a shaky economy will likely keep the housing market frozen for a while.
US stocks tumbled after President Donald Trump refused to rule out a full-blown recession in an interview Sunday. Prospective homebuyers are bracing for what Trump is now calling “a period of transition,” with steeper inflation, economic austerity and a slowing job market.
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Higher unemployment reduces consumer spending and slows demand, generally leading to lower mortgage rates, according to Colin Robertson, a mortgage industry expert and founder of The Truth About Mortgage website. Robertson added that “with uncertainty regarding tariffs, trade, and government spending, mortgage rates might be stuck in limbo.”
Housing giant Fannie Mae expects average mortgage rates to remain above 6.5% for most of the year. Lenders set rates depending on a range of factors, including investor expectations and the Federal Reserve’s monetary policy. Any shift in the economic outlook could change mortgage forecasts over the coming months.
