Mortgage Rates Dip Amid Market Turmoil
Mortgage rates have declined slightly this week due to market volatility triggered by the Trump administration's evolving tariff policies. The average 30-year mortgage rate stands at 6.89% as of Wednesday, a drop from 6.95% a week prior. Freddie Mac data indicates that 15-year mortgage rates have also decreased, from 6.12% to 6.05%.
"Mortgage rates have remained stable over the past month, reflecting the economy's continued strength," stated Freddie Mac's chief economist, Sam Khater.
Treasury yields, which typically influence mortgage rates, have been falling this week amidst market concerns over the economic implications of tariff policies. Wednesday's data revealed slowing growth in the services sector, further driving down yields. However, the decline in mortgage rates has been more muted in comparison.
Kara Ng, Zillow's senior economist, observed that investors appear less concerned about tariffs fueling inflation and prompting the Federal Reserve to restrict its rate-cutting plans, which are the primary drivers of mortgage rates.
Instead, "Markets are more focused on the potential growth impact of tariffs and their effects on economic activity," Ng remarked. "This has led to a decline in Treasury yields, but mortgage rates have not followed suit. We anticipate continued volatility in mortgage rates as economic conditions and policy decisions evolve."
Mortgage application activity has been diverse with rates hovering near 7%. According to the Mortgage Bankers Association, refinancing applications have surged by 12% as compared to the previous week, while applications for home purchases have decreased by 4%.
Investors can expect further insights into the economy's health and the Fed's potential rate-cutting path in the coming days. Friday will bring new employment data, followed by the release of the latest inflation readings on Wednesday.