What recent bank failures mean for mortgage rates (and you)

The recent collapse of Silicon Valley and Signature banks sent shockwaves through the financial sector, causing a ripple effect through the economy. While the situation has been challenging, there’s also been a silver lining in real estate: Mortgage rates are down. Read on for a summary of the situation and what it means for homebuyers, sellers, and owners like you.

Historically, mortgage rates have followed the 10-year U.S. Treasury yield. An increase in bond prices means lower yields—and lower mortgage rates. A growing number of investors, concerned about instability in the banking sector, are now fleeing to the safety of these government-backed bonds.

Last week, the U.S. Federal Reserve announced that it would hike its benchmark rate again as it continues its efforts to fight inflation, but this time by only a quarter percentage point. It also hinted that its series of rate hikes might be nearing an end.  

Economists at the Mortgage Bankers Association (MBA) and National Association of Home Builders predict that this could put further downward pressure on mortgage rates. 

“With this move from the Federal Reserve, MBA is holding to its forecast that mortgage rates are likely to trend down over the course of this year, which should provide support for the purchase market. The housing market was the first sector to slow as the result of tighter monetary policy and should be the first to benefit as policymakers slow—and ultimately stop—hiking rates,” said MBA SVP and Chief Economist Mike Fratantoni in a statement following the Fed’s announcement.

However, no one can predict with certainty how the market will react to the Fed’s policy moves—or how the banking crisis will play out and ultimately impact rates.

Bottomline: We could see more volatility in mortgage rates in the coming months.

What All This Could Mean for You


If you have considered buying a home in the next 3-6 months, it’s important to be aware of the situation and to be prepared to lock in a low rate when the time is right. A lower mortgage rate could potentially save you hundreds of dollars on your monthly payment, so you can’t afford to miss out. It’s also going to be crucial to work with knowledgeable real estate professionals who are monitoring this situation closely as it continues to unfold. 


Now may be a perfect time if you’ve been on the fence about selling your home. A further dip in mortgage rates could bring more buyers to the market. These buyers may want to act quickly in case rates rise again. It’s important to prep your home and get it listed quickly to take advantage of a possible increase in demand.


Depending on the terms of your current mortgage, you could save a bundle by refinancing if rates fall significantly. If you bought earlier than 2022, this will likely not apply to you. Let us connect you with a mortgage professional to discuss your options. The real estate market is still experiencing solid activity on the lower and middle end of the market, as we are still seeing multiple offers regularly due to low inventory. The higher end faces headwinds, especially around the new Mansion Tax from Measure ULA, which goes into effect on April 1st. It will be interesting to see how this new Tax law impacts real estate at $5,000,000 and above. 

And as always, don’t hesitate to reach out with any questions about this or other real estate issues. I would love to hear from you!

Work With Bounce

His dedication to growth as a real estate professional, since 2003, has divinely guided him into unprecedented levels of service that begin with his commitment to both his personal and professional development toward the highest good of his clients.
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