What has a stronger influence on Mortgage rates?

Without fail, when someone finds out I have been in the mortgage industry for over 27 years, they ask me if rates are going up or down.  The answer is never easy or cut and dry.  I try to deflect because a good answer does not make for interesting conversation for most people.  Plus, who has the time or patience to listen to me ramble on about cause and effect and monetary policy…  See?  There I go!

Here is the truth - Rates generally trend in steady directions.  Massive, sudden, gut wrenching rate changes rarely occur. Plus, rates don’t actually change per se, the price for the rates listed is what changes.  So a 2.75% 30 yr fixed is available but some lenders may charge a fee for that rate where three months ago they did not.

So what is tweaking rates right now?

What is causing upward pressure on rates?

• A good economy with good job and consumer spending numbers pushes rates higher
• Inflation - we have all heard that nasty term lately as higher inflation means higher rates 
• Supply and Demand.  Real Estate demand USUALLY drives up rates

What is causing downward pressure on rates?

• Right now, the spike in the Delta Variant of the COVID virus is keeping pressure on rates to stay low
• The Fed is still keeping the benchmark borrowing rate at 0% and buying tons of MBS.  Both of these keep rates low.

So what is the answer, Is inflation or the Delta Variant having more effect on mortgage rates right now?