Kopa Real Estate Blog

What Would Mortgage Rates Be If The War Ended Tomorrow?

One of the things I hear all the time from homeowners who are thinking about selling is:

“We want to wait until the war is over because mortgage rates should drop significantly.”

But would they?

What if the war ended tomorrow? What would actually happen to mortgage rates?

I think the answer might surprise you.

Right now, there is certainly a connection between the conflict, oil prices, inflation, Treasury yields and mortgage rates. So if the conflict ended and oil prices came down, that could be good news for mortgage rates.

But that doesn't necessarily mean we're going to wake up the next morning and see mortgage rates at 5%.

In fact, HousingWire Lead Analyst Logan Mohtashami recently addressed this exact issue.

According to Mohtashami, if the conflict ends and oil prices move lower, his current best case is for mortgage rates to be somewhere around 6.50% to 6.75%.

That's lower than where rates have recently been, but it's not the dramatic drop that many homeowners are expecting.

And there's an important reason for that.

The war is only one factor affecting mortgage rates.

Mortgage rates are also heavily influenced by the 10-year Treasury yield, inflation, Federal Reserve policy and mortgage spreads.

So even if the war ended tomorrow, we would still have inflation to deal with. We would still have the Federal Reserve. We would still have the economy and employment numbers. And we would still have the bond market.

In other words, ending the war could remove one of the things pushing rates higher but it doesn't eliminate all of the other factors affecting mortgage rates.

Mohtashami actually made this point very clearly. In his recent analysis, he said that getting mortgage rates back toward 6% has become more difficult because of the current economic and Federal Reserve environment.

And we've actually seen a real-world example of this.

Earlier this year, when there was an agreement to end hostilities, mortgage rates did decline, but only modestly. HousingWire reported that 30-year conforming mortgage rates averaged about 6.73%, a decline of just 5 basis points from the previous week.

So here's the question I would ask homeowners:

If you're waiting to sell your home because you're expecting the end of the war to cause mortgage rates to fall dramatically, what exactly are you waiting for?

Because if rates fall from, let's say, 7.25% to 6.50%, that's certainly meaningful.

But it's not the same thing as going from 7.25% to 5%.

And there's another issue that sellers need to consider.

If mortgage rates do come down significantly, there is a good chance that more buyers will come back into the market.

And when more buyers come back into the market, more homeowners who have been waiting on the sidelines may also decide:

“Now is the time to sell.”

That means you could potentially have more buyers, but also more sellers competing for those buyers.

So I don't think homeowners should make their entire selling decision based on the assumption that mortgage rates will suddenly collapse when the war ends.

Nobody knows exactly where mortgage rates will be six months from now.

What we do know is that mortgage rates are influenced by much more than just geopolitical events.

So if you're thinking about selling your home and you're waiting for the war to end before making a decision, I'd encourage you to look at the entire housing market, not just mortgage rates.

Look at your home's value.

Look at the competition.

Look at inventory.

Look at how long homes are taking to sell.

And most importantly, look at your own reason for moving.

Because waiting for the perfect mortgage rate can mean waiting for a market that may never arrive.

I'm Eric Peterson, Broker and Listing Agent with Kopa Real Estate.

If you're thinking about selling your home in the Austin area, North Austin, Cedar Park, Round Rock, Leander, Georgetown or Avery Ranch, give me a call or text at 512-791-7473.

I'd be happy to take a look at your situation and help you understand what today's market means for your home.