It’s been hard for mortgage rates to buy a bucket lately.
They’ve been creeping higher and higher all month with seemingly no letup in sight.
The worst part is they were at the lowest levels in over three years at the end of February.
Question is, what can stop the pain and deliver rates a rare W to end the month of March?
Well, if we’re honest, it’s going to take a combination of mutual restraint in the Middle East and more weak jobs data.
Mortgage Rates Need a Clear Message That Things Are Cooling Off in the Middle East
First and foremost, mortgage rates need a clear message that tensions in the Middle East are easing.
It seems every day we get mixed messages, today being no different.
On Truth Social, President Donald Trump said, “The United States of America is in serious discussions with A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran.”
While that seemed to make markets happy, as evidenced in the 10-year bond yield chart above, he followed that statement by adding something that might provoke Iran.
“Great progress has been made but, if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately “Open for Business,” we will conclude our lovely “stay” in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!).”
So clearly we’re getting a little bit of dovishness and hawkishness, all rolled into one.
And it’s unclear if Iran will be amenable to that type of talk, which is basically a threat packaged as a peace deal.
Yesterday, he said Iran had agreed to “most of” the United States’ 15-point peace plan, though we continue to hear conflicting reports.
Long story short here, we need to see actual, positive dialogue between the two countries, something Pakistan is reportedly attempting to host.
If Iran and the U.S. can have constructive talks that lead to an end of the conflict, oil prices would settle down, bond yields would ease, and mortgage rates would get a win.
But it all hangs in the balance, as there’s simultaneous talk of boots on the ground, which would be a clear ratcheting up of the current situation.
Mortgage Rates Need Cool Economic Data to Offset Recent Inflation Fears
The second ingredient needed for a winning week is cool economic data, namely a soft jobs report on Friday.
Before that, we have job openings on Tuesday, retail sales and the ADP jobs report on Wednesday, and finally the big BLS Employment Situation to cap off the week.
If those reports point to cooler data, especially when it comes to the labor market, mortgage rates will benefit from additional downward pressure.
While inflation concerns are elevated because of the Middle East conflict, namely due to surging oil prices, weak labor has been the offset.
Sure, we don’t want to root for a flagging economy, but if jobs numbers are robust AND inflation is rearing its ugly head again, it’ll be bad news for mortgage rates.
So you kind of need a jobs report miss and weak data in these other reports if you want mortgage rates to go down this week.
It’s a tall task given the conflict in Iran is still very much taking center stage.
But if we somehow see easing tensions there and weak economic data here, mortgage rates can be the beneficiary.
Especially since they’ve increased so much in such a short period of time, rising from sub-6% levels to 6.625% in the span of less than a month.
As always, take advantage of small windows of opportunity if you’re deciding whether to lock or float your mortgage rate.
We’re currently in an uptrend so if and when a winning week presents itself, be ready to pounce.
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.