Mortgage Rates Drop Amidst Market Volatility
Mortgage rates experienced a slight decline this week amidst market volatility fueled by the Trump administration's dynamic tariff policies. The 30-year mortgage rate averaged 6.89% through Wednesday, marking a decrease from 6.95% the previous week. Fifteen-year mortgage rates also fell, dropping from 6.12% to 6.05%, as reported by Freddie Mac.
"Mortgage rates have maintained stability over the past month, and economic data continues to indicate a strong economy," stated Sam Khater, chief economist at Freddie Mac.
The week witnessed a decline in Treasury yields, which mortgage rates often follow, as market anxiety grew over the potential economic implications of the tariff policies. Data released Wednesday indicated a slowdown in the services sector, further lowering yields. However, the decrease in mortgage rates remained relatively modest.
Investors appeared less concerned about the possibility of tariffs exacerbating inflation and prompting the Federal Reserve to adjust its rate-cutting strategy, which typically has a direct impact on mortgage rates, explained Kara Ng, Zillow's senior economist.
"Markets exhibited greater concern regarding the potential impact of tariffs on economic growth and activity," Ng said. "Treasury yields fell as a result, although mortgage rates did not mirror this trend. Looking ahead, we anticipate continued volatility in mortgage rates due to evolving economic conditions and policy changes."
Mortgage application activity has shown mixed results as rates hover near 7%. Refinancing applications saw a 12% increase through Friday compared to the previous week, while applications to purchase a new home declined by 4%, according to the Mortgage Bankers Association.
Investors can expect upcoming data releases to provide insights into the economy's health and the Fed's likely rate-cutting path. The unemployment report will be published on Friday, followed by inflation data on Wednesday.