Hi Reader,

The average 30-year fixed mortgage rate ended the week at 6.64%, up from 6.60% the prior week, according to Mortgage News Daily. Freddie Mac reported 6.49%, up from 6.43% the week before.

Why are rates up?

The bond market is reacting to geopolitical events and what those events could mean for inflation. Throughout last week and today, tensions increased in the Iran/U.S. conflict and renewed missile strikes pushed oil prices higher again.

Investors immediately began asking a familiar question:

That possibility caused Treasury yields to climb again.

Early in the week, oil jumped more than 5% after renewed tensions around the Strait of Hormuz, pushing the 10-year Treasury above 4.50%, the highest level since May. This is significant for mortgage rates, because mortgage rates track with the 10-year Treasury yield. ​

Looking ahead, markets are now focused on Tuesday's CPI report. Economists surveyed by the Wall Street Journal expect headline inflation to slow from 4.2% to 3.8%, while core inflation is expected to edge down from 2.9% to 2.8%.

Rates are reacting to investors constantly repricing inflation expectations. This week, the market's focus was almost entirely on oil prices and whether higher energy costs will eventually filter into broader inflation.

This week may be off to a rocky start with the U.S. and Iran trading fire - the news is reporting that "limited ships are crossing the Strait of Hormuz." The bond market will be assessing the possible inflation impact, in turn, possibly impacting mortgage rates. Rinse and repeat.

Contrarian opinion: While the optics are not great for home buyers, this rate environment is more than manageable. There are many tools in my tool belt to get borrowers great outcomes. We've been in this saw-toothing rate environment in the same range for several months and in that period, many clients have closed successfully and happily. Read below for my top tips.

Real Estate News

One of the biggest housing stories this week was that the 21st Century ROAD to Housing Act officially became law after passing Congress and taking effect.

The legislation is designed to improve housing affordability over time by increasing housing supply rather than trying to stimulate demand.

Some of the provisions that could matter most to buyers include:

1. Encouraging more residential construction by reducing zoning and permitting barriers.
2. Expanding financing options for certain types of housing.
3. Creating a four-year pilot program to make small mortgages (under $100,000) more accessible through lender incentives and borrower grants for down payments and closing costs.
4. Restricting many large institutional investors from purchasing additional single-family homes, which could reduce competition for buyers in some markets.

While this is not a law that's expected to lower home prices next month, it is encouraging to see policymakers focusing on increasing supply, which remains one of the biggest long-term challenges in today's housing market, especially in the Northeast.

Three soothing balms for home buyers

The biggest concern I'm hearing from buyers right now is mortgage rates. While rates certainly matter, they're only one part of the equation.

There are often ways to improve the outcome that have nothing to do with waiting for rates to fall (especially in markets where home prices keep increasing year over year). From finding better value within the rate sheet, to taking advantage of lender incentives like temporary buydowns, to structuring the down payment in a way that best supports a buyer's long-term financial goals, there are more options than many people realize.

I actually made a short video this week walking through three strategies buyers can use to navigate today's rate environment. You can watch it here on Instagram:

I hope your week is off to a great start!

-Nicole

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Nicole Hamilton Bernheimer | NMLS #2354049

nicole@homeownering.com, 917-650-0167

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