Average 30-year mortgage rates have been on a rollercoaster ride that would make Six Flags jealous. Over the last two weeks, rates have risen once again: from 6.16% on April 5 to 6.75% on April 19. That move adds more than $100 to the typical monthly mortgage bill.
The market now assigns a 85% probability to the Fed hiking rates +25 bps on May 3 — despite: 1) clear signs that inflation is already trending down, and 2) increasing recession risks. The more the Fed hikes, the faster they’ll have to cut if the economy starts contracting.
NOTE: On a $300,000, 30-year mortgage, a 50 bps increase in the mortgage rate would add ~$100 to the monthly payment and ~$35,000 to the total interest paid over the life of the loan.