What affects mortgage rates in the week of May 24-30, 2021

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Mortgage rates they are notoriously difficult to predict. They rise and fall depending on market sentiment, news headlines and various economic indicators. Here’s a look at what might be driving the markets this week.

Three statistics will be released on Tuesday – S&P CoreLogic Case-Shiller Home Price Index, Conference Board Consumer Confidence Index for May and new home sales data for April. The reports themselves do not affect mortgage rates, but the statistics reflect the state of the housing sector, which was characterized by record low stocks and high house prices.

Also on the horizon is the federal government’s first-quarter economic growth update and weekly jobless claims data due on Thursday.

Calculating mortgage rates is tricky, but here’s one simple rule of thumb: A 30-year fixed rate mortgage is exactly the same as the yield on 10-year Treasury bonds. When that rate rises, the popular 30 year fixed rate mortgage tends to do the same.

Fixed mortgage rates depend on other factors such as supply and demand. When mortgage lenders have too many businesses, they raise rates to reduce demand. When things go easy, they tend to cut rates to get more customers.

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

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