Mortgage rates dip following bank collapse

The average interest rate on a 30-year fixed mortgage tumbled after the collapse and federal takeovers of two medium-sized banks — Silicon Valley and Signature.

Today, mortgage rates are climbing back up to 6.75%, according to Mortgage News Daily. But they’re still down from the recent peak of more than 7%, which impacts a housing market that was cooling off even before the ongoing banking crisis.

The collapse of Silicon Valley Bank and Signature Bank was a shock to financial markets. Daryl Fairweather, chief economist at Redfin, said people — including prospective homebuyers — are still trying to figure out how widespread the systemic risks are.

“In general, buyers don’t really like the uncertainty,” she said. “They want to know when they start their home search that they’re going to get a particular rate.”

The last few days have been particularly unstable for mortgage rates, which were already volatile amid Fed rate hikes over the last year.

Right now, it’s not just buyers that might be spooked, according to Jonathan Miller of real estate appraisal and consultancy firm Miller Samuel. With banks taking a more cautious approach to lending, “I think the outcome of this may be … a tightening of credit by the banks themselves,” he said.

Correction (Mar. 15, 2023): An earlier audio version of this story misstated the name of the real estate appraisal and consultancy firm Miller Samuel.