Mortgage Rates Are Back Near 7% — What Happened?

If you've been watching mortgage rates over the last few weeks, you've probably noticed they moved up pretty significantly.

According to Freddie Mac, the average 30-year fixed mortgage rate reached 6.95% last week, up from about 6.65% just four weeks ago.

So, what happened?

A combination of stronger-than-expected employment numbers, higher inflation and rising energy prices caused investors to become more concerned that inflation isn't cooling quickly enough.

Then last week, the Federal Reserve raised its short-term interest rate by 0.25% and indicated that additional increases could still be coming.

One important distinction: the Fed raising rates doesn't directly raise mortgage rates.

Mortgage rates are driven much more by the bond market and expectations about inflation and the economy. In fact, mortgage rates had already moved substantially higher before the Fed meeting because the market was anticipating what the Fed was going to do.

There is a little encouraging news this week. Oil prices and Treasury yields have started moving lower, which could help mortgage rates stabilize or improve if that

trend continues.

But I wouldn't count on a big drop in rates right around the corner.

For buyers, my advice remains the same: If you find the right home and the payment works for you today, make the decision based on today's numbers rather than trying to perfectly time mortgage rates.

If rates improve later, we can always look at refinancing.

And despite higher rates, we're also seeing some positive changes on the lending side, including new conventional loan guidelines and credit-scoring options that may help some borrowers qualify or receive better pricing.

The mortgage market changes constantly. My job is to shop those options and figure out what makes the most sense for your specific situation.