Following Yellen and Powell’s joint address to the U.S. House Committee on Financial Services in which they mentioned “recovery is far from complete,” Treasury yields fell. The 30-year fixed rate mortgage followed suit, dropping 2 basis points to 3.36%. While the 15-year also fell, it edged up a net 8 basis points since last week.
The Federal Reserve kept benchmark interest rates near zero at last week’s FOMC meeting. The Fed also kept asset purchases the same, despite some speculation that they might buy more longer-term bonds to help reduce long-term interest rates. In response to concerns about inflation, they stated that they are willing to let inflation rise above 2% in order to reach their employment goals. How will this affect housing though? In the long run, Fannie Mae economists believe mortgage interest rates will gradually level off, only moving up minimally for the rest of 2021. They also don’t anticipate this having an effect on sales as rates are still historically low and mortgage payments will still be very affordable relative to income.