The development completed in Ashburn, Virginia on August 14th, 2024.
Andrew Caballero-Reynolds | AFP | Getty Images
Mortgage rates reached their highest level this week in more than a month, turning the course back after improvements.
According to Mortgage News Daily, the 30-year fixed-rate average rate rose to 22 basis points on Monday and another three basis points to 6.85% on Tuesday, completely eliminating the decline from last week.
Just like the stock market, the bond market appeared on the roller coaster last week, with mortgage rates on board.
Last week, fixed interest rates for 30 years have fallen to lowest levels since October last year, after President Donald Trump announced global tariffs. The announcement caused the stock market to plummet, and investors rushed to the relative safety of the bond market. As a result, bond yields decreased. Mortgage fees continue casually at the 10-year Treasury yield.
“Last week’s decline was a knee response worthy of more disastrous economic expectations,” said Matthew Graham, chief operating officer of Mortgage News Daily.
“So far, the bonds haven’t panicked much after several officials have discussed tariff negotiations and trading. Just this morning, when Treasury Secretary Bescent called tariffs melting ice cubes, we won the rate last week as economic horrors spiked.
The initial drop in mortgage fees last week had increased housing watchers’ chances of increasing the poor spring market. The mortgage rate has been lower than last year since the end of February, moving in a very narrow range, but not so much. Home buyers also compete with high and still rising home prices, not only reducing their confidence in the higher economy and their own employment.
“The spring housing season starts with an increase in more sellers and homes for sale,” Danielle Hale, Chief Economist at Realtor.com, said in her March housing report. “However, the high cost of buying, coupled with growing economic concerns, suggests a sluggish response from buyers in the early spring.”
The biggest fees so far this year came in January and February, when 30-year fixed mortgages fell from 7.26% to 6.74%, not last week. Despite that decline, pending home sales, a measure of initial signing contracts and the latest activity indicator measure for existing homes, rose just 2% from January to February, according to the National Association of Realtors. Sales were still 3.6% lower than in February 2024.
“Despite a small monthly increase, contract signing is well below normal historic levels,” said Lawrence Yun, chief economist at NAR. “A meaningful drop in mortgage rates can help both demand and demand, namely, increase affordability, and supply by reducing the lock-in effect of mortgage rates.”
The next important move in mortgage rates could be brought as the market digests new economic data: the consumer price index on Thursday and the product price index report on Friday. Both have a strong track record of impacting rate momentum.
