Rate Whipsaw
Daily mortgage rates swung over the past couple of weeks, though weekly averages from Freddie Mac are likely to show more muted movement. Originally, rates fell sharply after news that government-sponsored enterprises would be instructed to purchase $200 billion in mortgage-backed securities, as markets priced in additional demand for these products. That decline was partially offset the following week, as rising geopolitical tensions triggered a sell-off in the bond market, pushing both Treasury yields and mortgage rates higher. The first event lowered the spread between mortgage rates and treasury yields, whereas the second event raised yields across the board.
Zillow forecasts mortgage rates will continue a gradual descent toward 6% by the end of 2026, assuming current economic conditions hold. Policy shocks could sway that forecast.
What’s the impact on housing?
Despite the volatility in rates, the 30-year mortgage is still near the lows from 2025. Affordability is set to gradually improve as modest rises in home values mean that incomes can catch up, opening up a wider pool of shoppers able to buy a home.