Mortgage rates have climbed to their highest level in two months, sending a ripple effect through the housing market. As of April 17, the average rate on a 30-year fixed mortgage was 6.83%, up from 6.62% just a week earlier. According to Freddie Mac, this represents the largest one-week increase in nearly a year.
For months, interest rates on home loans had been on a steady decline, which likely encouraged many potential buyers to dip their toes into the market as the busy spring homebuying season began.
However, the volatile trade war between the United States and China, exacerbated by President Donald Trump’s unpredictable tariff policies, has had a disruptive impact on financial markets.
This uncertainty led to a significant sell-off in US bonds last week, which in turn affected mortgage rates.
Mortgage rates typically follow the movement of the benchmark US 10-year Treasury yield. Last Wednesday, the 10-year yield surged as high as 4.5%, only to ease back to around 4.3% by Thursday.
While rates have risen, they remain well below the 7% level they hit at this time last year. For comparison, mortgage rates stood at 7.1% in April 2024, during a time when purchase application demand was 13% lower than it is now, signaling that this year’s spring season is starting on a stronger note.
Despite the recent jump in mortgage rates, prospective homebuyers still seem undeterred. The uptick in rates, while significant, does not seem to have had the same dampening effect as it did last year.
This could be due to the fact that the market is still showing signs of growth, with demand for homes remaining strong as people continue to pursue homeownership.
As mortgage rates increase and the trade war rages on, homebuyers may need to prepare for further fluctuations in the coming weeks. The ongoing volatility in both the bond market and mortgage rates means that prospective buyers will need to stay vigilant and adaptable as they navigate the ups and downs of the housing market.