What’s Behind Today’s Mortgage Rate Volatility?

What’s Behind Today’s Mortgage Rate Volatility?

If you’ve been following mortgage rates recently, it might feel like they’re changing daily. One moment they’re climbing, and the next, they dip slightly. So, what’s causing this roller coaster of rates, and what does it mean for Chicago homes and buyers across the market? Here’s a closer look.

The Market’s Reaction to the Election

A significant factor behind mortgage rate fluctuations is political uncertainty, especially during election seasons. The financial markets often respond to both election outcomes and the anticipated economic policies of incoming leaders.

The National Association of Home Builders (NAHB) notes:
“... the primary reason interest rates have been on the rise pertains to the uncertainty surrounding the presidential election. Although the election is now complete, there continue to be growing concerns over budget deficits.”

This uncertainty has led to short-term rate increases as markets adjust. Additional factors like global tensions, supply chain issues, and trade policies also affect investor confidence. When investors seek safer assets, such as bonds, mortgage rates can shift indirectly. The more uncertainty, the more volatility in rates.

The Economy and the Federal Reserve

Economic conditions, particularly inflation and unemployment, play a major role in mortgage rate changes. The Federal Reserve (the Fed) has been focused on curbing inflation while monitoring the job market’s recovery. As inflation moderates and unemployment approaches optimal levels, the Fed has begun cutting the Federal Funds Rate.

Although the Fed doesn’t directly set mortgage rates, its actions have a ripple effect. A rate cut by the Fed often influences mortgage rate movements. For instance, during the Fed’s November 6-7 meeting, their anticipated rate cut caused a slight dip in mortgage rates.

What to Expect Next

Mortgage rates will continue to respond to shifts in the Fed’s policies, economic indicators, and other market forces. As a new administration takes the helm, additional unpredictability is expected. According to The Mortgage Reports:

“Today’s economic indicators come with mixed pressures on mortgage rates, and we’re likely to be in for a good amount of volatility as markets adjust and respond to the election...”

How MPG Can Help

Navigating these changes requires the expertise of trusted real estate professionals. MPG is here to help you understand the impact of these fluctuations on Chicago homes and the broader housing market. Whether you’re buying or selling, having a knowledgeable real estate agent by your side can make all the difference.

Bottom Line

Mortgage rate volatility is driven by economic trends and political factors, and it’s unlikely to stabilize soon. Connect with us---we're happy to guide you through this dynamic landscape and make informed decisions for your real estate goals.