There are bells ringing that mortgage rates are going back to 7%.
I see the headlines, I hear about the housewreckers.
Everyone seems to think that mortgage rates are going very, very high.
But then you look at the forecasting market website, and the chances of the rate even higher than 6.9% this year are very low.
It seems like a headscratcher, but then you remember that prices have already gone up a ton and could be at the top of their range.
So Close, Yet So Far From 7% Mortgage Rates
I mentioned this earlier this month. That despite everything that is happening, loan rates may remain below 7%.
That seems crazy considering the 30-year fixed rate just hit a new 52-week high of 6.85%, according to Mortgage News Daily.
But those errors are based on a survey of Freddie Mac’s weekly average, which is only 30 years old and is set at 6.58% this week.
It will probably go higher next week because it has been lagging and hasn’t captured a recent move.
However, it may only be around 6.65%, which is still 0.375% below the dreaded 7 handles that everyone is worried about.
So it depends on which source you use to talk about loan rates.
Freddie Mac is currently more forgiving than MND, which tracks interest rates each day.
Basically, MND captures all the movement of the ratio, which can fluctuate from day to day.
In contrast, Freddie Mac’s data is smoothed because it is only reported once a week and therefore misses things.
For example, if prices are calm early next week and improve slightly today, Freddie Mac may not report higher prices in its next release.
30 Year Fix Never Above 7% Starting January 2025
The last time the 30-year fixed rate was above 7% was in mid-January 2025, according to Freddie Mac.
Meanwhile, the 30-year fixed was registered a few days above 7% as recently as May 2025 according to MND data.
This is probably why the lowest probability of a 30 year fixed rate return is 7% according to Freddie Mac.
Still, it makes you wonder when you look at tensions in the Middle East and rising oil prices (and bond yields).
We’re not that far off if things don’t improve, even if Freddie’s data is playing catch-up.
If the conflict worsens and/or the economic data comes in hot, it is certainly not out of the question.
Mortgage rates have already increased by about 1% since the crisis began
However, one thing in favor of mortgage rates is that they have already risen by around one percent since the conflict began.
So it’s not like bond investors and MBS investors don’t know what’s going on.
They have already priced in the Iranian conflict, high oil prices, and the inflation that comes with it.
If mortgage rates hadn’t gone down, sure, you’d be worried they could go much higher from here.
But it is at a 52-week high and only about 20 points (0.20%) from a two-year high.
In other words, the risk is considered in the levels of the loan. Can he go even higher? Yes.
However, it becomes difficult for them to continue climbing once they have already climbed. And it actually creates a situation where there is more room to fall, assuming things go smoothly in the Middle East.
Everyone knows things are bad out there and interest rates have changed in response. If things improve, prices can return to pre-conflict levels over time.
Finally, there is an old saying that the cure for high prices is high prices.
This often applies to commodities such as oil, where high prices destroy demand and lead to increased supply.
That’s one way for prices to come down.
In the case of mortgage loans, eventually demand declines and lenders will have to pass on discounts (or reduce margins) to improve business.
And my guess is that banks and lenders know very well that a 7% loan rate looks bad and will do everything in their power to avoid it.
Continue: Give my loan rate calculator a quick comparison of different interest rates.
