We started this week with a bit of an unexpected shake-up as mortgage rates were highly volatile. The 30-year fixed-rate mortgage jumped to its highest level in more than a month. It reached 6.74% in January and February, a decline from its peak of 7.26% earlier in January. Though it did jump 22 basis points Monday, increasing a total of 3 more basis points Tuesday to close Tuesday at 6.85%.
This latest jump represents a departure from the relatively stable mortgage rate we experienced since late February. Months went by with it remaining in the 6.74% range, but a change is now in the wind. Though this is still lower than last year’s rates, the current numbers show that the market is still vulnerable to economic headwinds. Volatility in the bond market has been a factor for the 30-year fixed rate. This is especially true with the yield on the 10-year Treasury, which is the best indicator of mortgage rates.
Industry analysts point out that the recent mortgage rate movement is indicative of the current macroeconomic fears at play. “Last week’s drop was a knee-jerk reaction that priced in more dire economic expectations,” commented Matthew Graham, chief operating officer at Mortgage News Daily. He further elaborated on the current market sentiment, stating, “So far this week, bonds are less panicked after several officials have discussed tariff negotiations and deals.”
The market is looking ahead to this week’s economic data reports. This week’s Thursday consumer price index and Friday producer price index could influence the direction mortgage rates take. Given the excitement and expectation around these new reports, the mortgage rate may very well keep moving up and down as new economic information is learned.
Lawrence Yun, chief economist for the National Association of Realtors (NAR), highlighted the implications of these changes on housing demand and supply. He noted that “despite the modest monthly increase, contract signings remain well below normal historical levels.” He noted the importance of any sharp drop in mortgage rates spurring a recovery in housing market activity. “A meaningful decline in mortgage rates would help both demand and supply – demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect,” Yun stated.