What’s driving mortgage rates the week of May 24-30, 2021

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Mortgage rates are notoriously difficult to predict. They rise and fall based on market sentiment, headlines and a variety of economic indicators. Here’s a look at what could move markets this week.

On Tuesday, a trio of statistics will be released — the S&P CoreLogic Case-Shiller home price index, the Conference Board’s consumer confidence index for May and new home sales data for April. The reports themselves don’t drive mortgage rates, but the stats reflect the state of the housing economy — which has been characterized by record-low inventories and soaring home prices.

Also on the horizon are the federal government’s update to first-quarter economic growth and weekly jobless claims data, both expected Thursday.

The calculus behind mortgage rates is complicated, but here’s one easy rule of thumb: The 30-year fixed-rate mortgage closely tracks the 10-year Treasury yield. When that rate goes up, the popular 30-year fixed rate mortgage tends to do the same.

Rates for fixed mortgages are influenced by other factors, such as supply and demand. When mortgage lenders have too much business, they raise rates to decrease demand. When business is light, they tend to cut rates to attract more customers.

Ultimately, rates are set by the investors who buy your loan. Most U.S. mortgages are packaged as securities and resold to investors. Your lender offers you an interest rate that investors on the secondary market are willing to pay.

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Written by
Jeff Ostrowski
Senior mortgage reporter
Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.