Welp, the question I asked recently would mortgage rates hit 5.99% or 7% next, has been answered.
And unfortunately, if you are a potential home buyer or a recent homeowner looking for interest rates, it’s 7%.
The latest enemy of mortgage rates is a new round of global tariffs, including a huge 104% duty on Chinese imports.
It was enough to rattle the bond market that runs the prices of mortgage rates.
As a result, the 30-year-old fasting is now priced exactly to 7%per year. Morte loans daily.
7% mortgage rates are back
Just when you thought they were gone forever, the high priority rates are left. The 30-year-old fasting is at an even 7% today, up from 6.85% yesterday, per year. MND.
It’s a big one-day move and it got on the heels of another big one-day movement on Monday as the rates jumped 22 basic points (0.22%).
We have now gone from 6.55% at the end of last week to 7%, which is pretty amazing.
As noted, the driver is the new round of Customs, which is a sky -high 104% on China, including a “previously imposed 20% duty, a 34% extra duty and an increase in 50% at the last minute that Trump signed late Tuesday.”
China immediately responded and raised its tariff on US goods to 84% from a previously announced 34%.
The European Union (EU) also approved retaliations on the US import that comes into force on April 15.
In other words, we are in a global trade war at full scale. There is no bluffing, there are no negotiations (so far), and maybe not even back to the status quo.
The immediate effect was that bond yields Skyrocket in the overnight session to over 4.50%before they lay down for approx. 4.35% as for this writing.
Combined with a priority rate spread, which is also expanded as a result of volatility, the 30-year-old fasting is over 7%.
Over by Wells Fargo, which I also track, the 30-year-old fixed price was at 6.875%, up from 6.25% as late as Friday.
If this stops, they may also need to exchange the 6 with a 7 despite the psychological message it will send to customers.
The mortgage rates are rising right in time for spring home purchase
The worst thing is that this could not come at a worse time for the housing market, which already showed signs of weakness.
Rising storage for sale, stale lists, price falls and poor affordable prices will now be accompanied by 7-handle rates.
Not exactly ideal when home builders try to move their growing inventory and potential home buyers are simply trying to make a deal pencil.
The same goes for sellers who hoped that lower mortgage rates could massage the transaction despite the worst affordable price in recent history.
What is interesting, however, is that mortgage rates are historically bad in the months of April and May.
So this is actually a lot on fire for mortgage rates. They behave as it usually does.
The problem is the speed and size of change. If the rates were kind of just stumble in the tall 6s and make 7s all year, no one would be too upset.
But they fell before this massive turn, and looked like they were taking a step toward the high 5s.
So boom, it’s back to 7%. I said back a while that I didn’t know if the housing market could do 7% priority rates again.
Of course, it is not a huge difference in monthly payment that goes from says 6.75% to 7%, but the mental costs are ignorant.
If you have a household power in the past year and pay attention to the lower prices offered, only to see them jump back past 7%, it is another gut stance that may be the last straw.
What happens next to mortgage rates?
Ah, the question of million dollars. Is this the start of something really bad, or just a short -lived noise we forget about a month?
It’s hard to say. On the one hand, it feels like a paradigm shift, as if we are completely set up status quo on global trade.
On the other hand, it can be something really intense theater mixed with some negotiations at the next level.
Whatever it is, the markets don’t like it, whether it’s the stock market or bond market.
Both have sold at the same time, while recession odds are currently rising (now about 60%).
It should be pointed out that the 30-year-old fasting was about 7.50% in April 2024. So today’s mortgage rates remain quite slightly lower.
And Fed is now expected to reduce its short-lived FED funds four times this year, up from only one or two recently.
This will at least be good for the Heloc rates, which are tied to the primary rate moving in Lockstep with FFF.
Whether the long -term bond yields follow is another question, but I would not be shocked if the rates decided back in the third quarter.
In my Priority Rate Price Presentation of 2025, I actually said the rates would be lower in the first quarter than the second quarter before going even lower in the third and fourth quarters.
So far it plans. Maybe we will just have to weather a few bad months before the interest rate finish arrives later in the year.
The problem is that we risk another terrible spring shopping season, which can result in falling housing prices and possibly more distressed sales.
The good news is that most homeowners have fixed-rate mortgage loans set at 2-4%, so they get a really good incentive to hang on them.
Update: In a truth social post, President Trump called on a 90-day break to the global tariffs that were immediately with effect (while maintaining a lower 10% mutual duty during this period).
However, he also announced a further increase in China duty rates to 125%, which was immediately worked. Unclear how this will go, but so far the 10-year bond yield is still over 4.40%.
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.
