I keep hearing that lower mortgage rates are the silver lining of a global trade war.
That despite the stock market fallout and possibly much higher prices due to tariffs, mortgage rates are at least lower.
But how much lower are they really? And at what cost? And is anyone actually biting, other than recent home buyers looking to refi?
While there’s nothing wrong with looking for something positive in these challenging times, it should be noted that rates are still not far from 7%.
In fact, somehow the 30-year fixed is back to around 6.75% today!
Mortgage Rates Head Back Toward 7%
While the last week and change was great for mortgage rates, today hasn’t started so well.
As I pointed out a few days, big mortgage rate rallies like the one we saw recently are often stopped in their tracks without warning.
Beware of the mortgage rate bounce I said, and that’s exactly what we got today.
The 30-year fixed, which had fallen from 7.25% in mid-January to around 6.60% on Friday, is back to 6.75%.
It looked destined to keep falling, likely hitting 6.50% next, but rates jumped back up today, despite another bad day on the stock market.
Perhaps bonds have yet to catch up to the stock market, which is highly volatile at the moment.
Maybe bonds need a breather while they attempt to determine President Trump’s next move.
But the takeaway here is mortgage rates are still only 25 basis points (0.25%) away from 7%, at least according to MND.
So perhaps that silver lining isn’t so silvery after all.
After enjoying a nice down trend, mortgage rates seem to have gotten nowhere really.
Did you know they were actually a lot lower as recently as October of last year?
While your memory might fail you, they were. The 30-year fixed was basically hovering around 6%.
Sure, rates are lower than they were a year ago, which might boost home sales this spring, but they remain closer to 7% than 6%.
And days like this make you wonder if we could revisit those levels again, which would undoubtedly take the wind out of the very fragile housing market’s sails.
Mortgage Lenders Will Use Any Excuse to Raise Mortgage Rates
The lesson today is that mortgage lenders will use any excuse to increase mortgage rates.
Why? Because it’s much easier to play defense, especially in uncertain times. They don’t want to get caught out on the wrong side of the trade.
Remember, they’re offering a fixed interest rate for the next 30 years. They get that wrong and it can be a costly mistake.
As such, lenders will take their time lowering interest rates, but if they get even a sniff of something that increases risk, they’ll raise them in an instant.
Per MND, the 30-year fixed jumped from 6.60% on Friday to 6.75% today. That’s a pretty sizable one-day move for their daily rate survey.
Granted, the 30-year fell by 12 bps on Thursday, followed by an additional 3-bp move on Friday, collectively 15 bps.
So the entire improvement of last week was essentially erased in a single day.
That’s kind of how it goes. You have to carve out a few winning days to make progress, but one day can completely unravel it.
It’s two small steps forward, and one big step back.
But Wait, There’s a Chance This Is Just a Bounce
Before I get too pessimistic here and give up on the recent mortgage rate rally, I should note that this could simply be a bounce.
The stock market does this all the time. After a few down days, there’s a rally. It’s basically a breather.
Stocks and mortgage rates don’t move in a straight line up or down, especially after a big rally in one direction.
That could be what we’re seeing today. Granted, at the moment both stocks and bond yields are lower, which is uncommon.
Typically, if stocks fall, there’s a move into bonds, which increases their price and lowers their yield (interest rate).
Not so at the moment. Everything is selling off as Trump threatens even more tariffs.
It’s as if nobody knows what to think, and nothing is safe, not even government bonds that are typically a safe haven for investors.
But if we zoom out, here’s one thing to consider. The Fed is now expected to cut its own federal funds rate four times by December, per CME FedWatch.
And while the Fed doesn’t set mortgage rates, bonds do take cues from the Fed, and if cutting is expected, you might see 10-year bond yields drop.
That tends to translate to higher prices for mortgage-backed securities (MBS), and that leads to lower mortgage rates.
So right now might be the best time to take a longer view instead of getting caught up in day-to-day madness.
Not easy if you have to lock or float a mortgage rate in the next few days or weeks, but reassuring if you want to refinance your mortgage eventually. Or perhaps buy a home.
Read on: How to track mortgage rates with ease.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.