If my prediction is right, mortgage rates will soon be above levels seen a year earlier.
The biggest positive for the housing market lately was the fact that mortgage rates were markedly lower this year versus last.
But that changed in an instant once the Middle East conflict broke out, sending interest rates flying higher.
Now they’re in real danger of eclipsing levels seen in spring of 2025, which wouldn’t be great news for prospective home buyers.
And it could mean home sales don’t improve much relative to last year, remaining stuck near 30-year lows for yet another year.
Are Mortgage Rates About to Surpass Spring 2025 Levels?
In early April of last year, the 30-year fixed was averaging around 6.625%.
It was actually kind of good news at the time because rates started the year above 7%.
There was some momentum for rates just in time for the spring home buying season. Things were looking bright.
This year started even better than that, with the 30-year fixed falling below 6% for the first time in about 3.5 years.
Then the conflict in Iran began, and mortgage rates did an about face, climbing from those fresh lows to 6.50% in no time at all.
Now mortgage rates face a fate nobody expected. They could soon rise above their year-ago levels.
At last glance, the 30-year fixed is averaging around 6.50% again, up from 6% at the end of February.
If the trend continues to not be our friend, which is likely in my opinion, mortgage rates might soon be 6.625% and then 6.75% after that.
That would mean that the year-over-year gap in rates that has been favorable all year could go negative.
Year-Over-Year Gap in Mortgage Rates Has Shrunk Massively
I was looking at the YoY change in mortgage rates on Mortgage News Daily and noticed it had shrunk massively lately.
It was nearly 0.50% a week ago, and now it’s only about 0.25% lower.
If this trend continues, with rates continuing to rise week after week, we could see the gap disappear completely and eventually go negative.
As noted, rates in early April 2025 were around 6.625%. We are already knocking on the door and any additional bad news out of the Middle East will push us even higher.
To be honest, I kind of expect mortgage rates to go higher from these levels before we see any actual relief.
Sure, there will be days when they move lower, such as today, but lately it’s been a lot of the one step forward, two steps back.
In other words, we erase some of the damage, but when you zoom out, the trajectory is higher and higher.
If and when this YoY gap disappears, the optimism of the 2026 spring housing market might completely fizzle.
After all, folks were excited because rates hadn’t been this low since 2022. If they wind up being higher than 2025 levels, it’s going to be super deflating.
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.