A very light week of data with weekly jobless claims on Thursday and the US services PMI on Friday.
The lack of reporting means that the focus will be on the ongoing conflict in the Middle East, which has just happened.
The US has just completed its ninth consecutive night of airstrikes against Iran in an attempt to weaken its ability to attack ships patrolling the Strait of Hormuz.
Despite that, oil prices have fallen from their highs, although they have rebounded recently.
Therefore, any movement in the mortgage rate this week will likely be related to geopolitics.
Limited Economic Data Says War Will Drive Housing Rates This Week
As noted, there is not much on the economic calendar this week. We get frivolous claims every week so that’s a given.
And probably nothing else until Friday, when we get the Flash US services PMI, which provides a snapshot of the economy and whether it’s expanding or contracting.
It’s known as an important report, but it pales in comparison to things like the CPI, PCE (the Fed’s preferred monetary strength gauge), and the monthly jobs report.
So that means we will be looking at political developments to determine the benchmark for mortgage rates this week.
They went wild last week, with the 30-year rising to 2026-6.75% higher on Monday, before easing due to a series of subdued inflation reports.
Mortgage rates were at risk of reaching 52-week highs, but fortunately both CPI and PPI came in below consensus.
Those “saved” mortgage rates, though allowed them to drop to around 6.625% instead of possibly going up to 6.875% and higher.
Can We Keep Avoiding 7% Mortgage Rates?
Something I have been keeping an eye on is the 7% return on the loan.
So far, despite rising oil prices and the threat of further escalation in the Middle East, mortgage rates have remained below 7%.
The 30-year fix is at hand, but there seems to be a barrier that has stopped us from reaching those mentally challenging heights.
But there are reports that the Houthi forces in Yemen have “declared a naval embargo” against Saudi Arabia, which appears to be working quickly.
The Saudis have been moving their oil from the Red Sea export point to bypass the Strait of Hormuz.
Assuming this makes a real impact, it could choke off more oil resources and lead to further price increases, putting more pressure on inflation as well.
Bonds (and mortgage rates) suffer when inflation rises, so this will be an important story to watch this week and beyond.
As I said, the loan rates have done a good job of avoiding big losses despite what is happening there.
Although on the other side of the coin, they are still up sharply since the Iranian tensions started in late February.
The 30-year fixed rate was less than 6% then, and today it is closer to 6.625% to 6.75%.
That’s about 75 points high, which means you can’t really argue with it it’s already bakedwhich helps us avoid 7%.
However, if this conflict continues and/or worsens, we are likely to go higher. And we’re not too far from 7% in the grand scheme of things.
What is stopping us seems to be the belief that negotiations to end the conflict can still be reached.
At that time we are returning to pre-war levels where rates were close to 6% and below.
Read on: Try my loan calculator that compares rates/payments in eighths of a percent.
