LOS ANGELES (AP) – Mortgage rates have been falling mostly in recent weeks, encouraging future home shoppers as the spring home viewing season progresses.
But the same factors that have raised mortgage rates to lowest levels since December — indicating a slowdown in the US economy, and uncertainty about potential fallout from Trump administration’s tariffs on imports has clouded the outlook for where mortgage rates will go from here.
“We don’t expect any significant relief from high mortgage rates in the near future, as inflation remains stubbornly high. This cannot be helped by tariffs that the Trump administration believes are committed to unfolding.”
The average US 30-year mortgage rate has fallen to 6.63% for the seventh consecutive week from 7.04% in mid-January, mortgage buyer Freddie Mac said Thursday. A year ago, the average was 6.88%.
The average rate is at its lowest level since December 12th, at 6.6%. It fell shortly in September last year, but remains more than twice the average rate hit rate of 2.65% in January 2021.
The borrowing costs for a 15-year fixed-rate mortgage that is popular with homeowners looking to refinance their mortgage to a lower fee have also been eased this week. The average rate fell to 5.79% from 5.94% last week. A year ago, that averaged 6.22%, Freddie Mac said.
Mortgage fees are affected by several factors, including bond market investors. Expectations for future inflationUS Treasury and Global Demand Federal Reserve Interest Policy Decided.
The recent decline in mortgage rates has moved to 10-year Treasury yields, which lenders use as a guide to pricing their home loans.
Yields, which were 4.79% in mid-January, have mostly eased since, reflecting concerns about economic growth and the potential impact of the Trump administration’s decision. It imposes tariffs on some of the country’s largest trading partners. Yield was 4.30% in noon trading on Thursday.
It can be said that bond market jitter ultimately helped home shoppers benefit home shoppers by leading to lower mortgage fees, but the rate trajectory from here is not certain.
Tariffs can boost inflation, leading to a higher yield on Treasury bonds over the past 10 years, boosting mortgage rates. This is because bond investors demand higher returns as long as inflation continues to rise.
And then there’s the Fed. This shows a more cautious approach to measuring where inflation is on the rise and what policies the Trump administration pursues.
So far, the steady decline in mortgage rates this year has not been enough to boost home sales. Sales of previously occupied US homes fell in January The rise in mortgage rates and prices have frozen many home buyers despite wider real estate options in the market.
Home sales are pending and are pioneering future completed sales, indicating potential further sales declines in the coming months. They skated to an all-time low in January.
Still, last week, mortgage applications rose 20.4% from the previous week, according to the Mortgage Bankers Association. According to the MBA, the scale of mortgage refinancing applications skyrocketed by 37%.
Mortgage application pickups are typical during this period, but the sharp rise is a signal that mortgage rates have fallen enough to drive some buyers off the fence.
Price pullbacks are a good time for home shoppers. Home inventory in the market has been rising sharply for a year ago, with prices rising more slowly in many metropolitan areas, including Austin, Dallas, Tampa, and Tampa, Florida.
Still, if the economy and labor market deteriorate, more attractive mortgage fees may not be enough to motivate home shoppers.
“Inflation remains a problem, but now the economy is beginning to show signs of weakness,” said Daryl Fairweather, chief economist at Redfin. “What that means for the housing market is that these two factors make buyers more reluctant to jump into the market.”
