How Global Uncertainty Is Impacting Mortgage Rates

If you’re thinking about buying or selling a home, you’ll want to keep a pulse on what’s happening with mortgage rates. Rates have been climbing in recent months, and just a few weeks ago, the 30-year fixed mortgage rate from Freddie Mac approached 4% for the first time since May of 2019. But that climb has dropped slightly over the past few weeks.

The recent decline in mortgage rates is primarily due to growing uncertainty around geopolitical tensions surrounding Russia and Ukraine. But experts say it’s to be expected. Here’s a look at how industry leaders are explaining the impact global uncertainty has on mortgage rates:

Odeta Kushi, Deputy Chief Economist at First American, says, “While mortgage rates trended upward in 2022, one unintended side effect of global uncertainty is that it often results in downward pressure on mortgage rates.” Kushi’s insight is a reminder that, historically, economic uncertainty can impact the 10-year treasury yield – which has a long-standing relationship with mortgage rates. Basically, events overseas can have an impact on mortgage rates here, and that’s what we’re seeing today.

While no one has a crystal ball to predict exactly what will happen with rates in the future, experts agree this slight decline is temporary. Sam Khater, Chief Economist at Freddie Mac, adds that the decline in rates won’t last: “Geopolitical tensions caused U.S. Treasury yields to recede this week . . . Consequently, rates are expected to stay low in the short-term but will likely increase in the coming months.” Rates will likely fluctuate in the short-term based on what’s happening globally. But before long, experts project rates will renew their climb.

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