Are Mortgage Rates Going to 8.5% Next?

The year 2022 have been absolutely dreadful with respect to mortgage rates.

We’ve seen the popular 30-year fixed rise from sub-3% levels to around 7% in the matter of about 10 months.

And despite that unprecedented increase, the worse may be yet to come.

That’s if you buy into the latest remarks from National Association of Realtors (NAR) chief economist Lawrence Yun.

His belief isn’t based on a gut feeling, but rather a technical analysis.

Next Stop 8.5% for the 30-Year Fixed?

If you thought a 7% mortgage rate was bad, how about an 8% mortgage rate? Or worse, an 8.5% mortgage rate.

While the thought of fixed mortgage rates that high sounded impossible a few months ago, now it’s not so far out there.

During a presentation last week at the National Association of Real Estate Investors in Atlanta, Yun spoke of rates breaking through the 7% threshold.

At last glance, they are still technically below 7%, assuming we use the highly-cited Freddie Mac mortgage rate survey as our gauge.

That pinned the 30-year fixed at 6.92% during the latest week ending October 13th, though data often lags reality.

Because the survey collects mortgage rate data from loan originators between Monday and Wednesday, any rate increases midweek or beyond aren’t factored in until the following week, assuming they hold.

Anyway, that means the additional bad news of the hot CPI report wasn’t included, which pushed mortgage rates above 7% later in the week.

That, according to Yun, is a technical level of resistance, which after being broken, could lead to the next level being tested.

This is similar to stocks and other securities, which have levels of support and resistance.

If prices fall to a certain level, there might be support to stop the fall. If prices go too high, there might be resistance to go higher due to selling.

In the case of mortgage rates, there has been little support to stop the rise. And no resistance for interest rates to move higher, due to continued inflationary concerns.

And apparently after breaking through 7%, an 8.5% 30-year fixed could be the next level of resistance to be tested.

Of course, these resistance and support levels are opposing forces, and only one actually comes to fruition.

So there’s a chance mortgage rates do not go to 8.5%, and instead fall. But the fact that…

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