This week, mortgage rates surged to their highest point in over a month, reversing a recent trend of decline. The average rate for a 30-year fixed mortgage increased by 22 basis points on Monday, followed by a further rise of 3 basis points on Tuesday, settling at 6.85%, according to data from Mortgage News Daily.
The bond market has experienced significant fluctuations in the past week, and mortgage rates are closely tracking this volatility. Following President Donald Trump’s announcement of global tariffs last week, the 30-year fixed rate fell to its lowest level since October, prompting a swift drop in the stock market and a subsequent shift of investor interest toward bonds. Lower bond yields typically lead to lower mortgage rates, as they tend to align with the yield of the 10-year Treasury.
Matthew Graham, chief operating officer at Mortgage News Daily, noted that the previous week’s decrease was largely a reaction to heightened economic concerns. He stated, “Last week’s drop was a knee-jerk reaction that priced in more dire economic expectations.” This week, he observed a more stable bond market following discussions among officials regarding tariff negotiations. Graham commented that Treasury Secretary Scott Bessent’s description of tariffs as a “melting ice cube” triggered an immediate market reaction, suggesting that rates rebounded from last week’s fluctuations as economic anxieties receded.
The dip in mortgage rates had initially raised hopes among housing analysts for an uptick in activity during the typically sluggish spring market. Since late February, rates have remained relatively flat, remaining lower than last year’s averages, yet homebuyers are still facing the dual pressures of high home prices and diminishing confidence in the economy.
Danielle Hale, chief economist at Realtor.com, highlighted in the March housing report that the spring housing season is seeing an increase in available properties and sellers. However, she cautioned that the burden of high purchasing costs coupled with economic uncertainty could stall buyer engagement early in the season.
The most significant decrease in mortgage rates in recent history occurred in January and February, when the 30-year fixed mortgage dropped from 7.26% to 6.74%. Despite this decline, pending home sales—a key indicator of market activity—saw only a 2% rise in February compared to January, according to the National Association of Realtors. Moreover, sales were still 3.6% lower than the figures reported in February 2024.
Lawrence Yun, the chief economist at NAR, remarked, “Despite the modest monthly increase, contract signings remain well below normal historical levels.” He suggested that a significant drop in mortgage rates could stimulate both demand and supply dynamics: enhancing affordability for buyers and alleviating the pressures associated with the mortgage rate lock-in effect for existing homeowners.
Looking ahead, the market is poised for adjustments in mortgage rates as it incorporates new economic data, particularly the consumer price index set to be released on Thursday and the producer price index on Friday, both of which have historically impacted rate trends.
