The mortgage rates whirlwind continues as we start a week.
This time the rates are back below 7% (just button), though it is a little comfort considering where they were only 10 days ago.
If you remember it, the 30-year-old was close to 6.5%, which felt pretty decent at the time, especially when we had what felt like solid downward speed.
Today feels like a little bit of relief, but it’s still one step forward, two steps back situation.
And given the uncertainty left, I would not knock on prices that will be much better at any time soon.
Mortgage rates take up the elevator and stairs down
Someone said something recently about mortgage rates that took an elevator on their way up and stairs on the way down.
It is an analogy that is similar to what I always say about prices – that lenders take a long time to lower them and do not waste any time raising them. The chart above from MND illustrates this.
In other words, they are happy to reduce (their own) risk of raising the rates, but very hesitant to take on more risk by lowering them.
In short, it is not in their best interest to take a chance for prices, especially in today’s environment.
They do not want to lower the rates only to see Breaking News about new tariffs or another development related to trade that sends them flying again.
So they price prices conservatively, and anyone who needs a home loan has to pay a premium.
This is an explanation of why the priority interest rates have been expanded again and are now closer to 260 basic points (BPS).
Investors in mortgage -backed securities (MBS) require a higher premium for the risk of investing in priority loans right now. And who could blame them?
It is someone’s guess what will happen then, but the chances of a greater probability rates going up instead of going down.
Even if they come down, they probably fall methodically as opposed to enjoying some big rally.
Conversely, it may not take much for them to rise back over 7% again if President Trump changes his mind on customs again, which story tells us is likely.
Which drives mortgage rates lower today?
The latest bit of good news for mortgage rates was a postponement of rates on computers, smartphones and other electronic devices.
It allowed 10-year-old bond yield to take a breath after rising from less than 4% levels early last week to as high as 4.60% before they lay for approx. 4.35% today.
For the record, this move in yields was reportedly one of the largest two-day climbs on the record.
Not good if you try to reduce the mortgage rates, which was a declared political target for this administration.
It came on the heels of the 90-day delay on mutual tariffs for global trading partners, so a few positive developments for yields after a very hard week.
However, the move is lower uncertain because Trump said that the exemption for tariffs for such categories was temporary.
And will only be introduced to give time for US companies to move production domestic.
Who, of course, knows what will bring later today? Or tomorrow? It is constantly flux and nothing is distant close to determined.
Just that uncertainty Is what I am talking about when I say that mortgage rates will have a hard time seeing significant features lower.
Feeding frequency cuts are expected in any way
Despite all the duties that flip-flopped, Federal Reserve Governor Christopher Waller said he expects Fed to reduce the rates later in the year.
He referred to Trump’s tariffs as “transient” in terms of inflation with a “smaller customs scenario”, resulting in inflation of 3%.
And a larger customs situation that resulted in 4% to 5% inflation, which “would ebb as growth slowed down and unemployment rose.”
In both scenarios, he believes that Fed will reduce its own bold -fonde rate “With timing is the only question.”
The way it breaks is larger tariffs that may require a relief cut (presumably earlier), while less would get a “good news” clip later in 2025.
There has also been quantitative relief (QE) making a comeback where bold steps in as a buyer of treasuries and possibly even mortgage -supported securities (MBS).
But it would probably only happen if things got really ugly on the trade war front.
In any case, it seems that interest rates will ease at some point this year, though it may just happen in the second half of 2025.
The mortgage rates were on a roll in early April, but have now been derailed, possibly for all the spring home buying season.
Not good for home sellers (or buyers), but predictions from 2025 priority rate may still be performing if the third and fourth quarters see less volatility.
Until then, it’s hard to get too excited about mortgage rates, but you never know. They often surprise us when no one expects it.
Read on: How to track priority rates using bond yields and MBS prices.
Before creating this site, I worked as a banking director of a wholesale loan in Los Angeles. My practical experience in the early 2000s inspired me to start writing about mortgage loans 19 years ago to help potential (and existing) home buyers better navigate the home loan process. Follow me on x for hot take.
