Mortgage rates moved a single basis point lower this week as the markets geared up for President Trump’s “Liberation Day” tariff announcement.
That is a much smaller drop than seen in the 10-year Treasury, one of the benchmarks used to price 30-year fixed rate mortgages.
As of 11 a.m. on Thursday morning, the 10-year was at 4.02%, a drop of 18 basis points from Wednesday’s 3 p.m. close. The Trump announcement came an hour later.
On March 27, the 10-year had its highest recent close at 4.37%.
These declines are likely reflective of investors’ fears about the impact the tariffs will have on the U.S. economy.
Lender concerns over what’s happening might be behind the growing spread between Treasurys and mortgages.
“Mortgage rates look prepared to fall further as angst intensifies around the new tariff announcements, although originators could delay trimming rates if volatility stays high,” said Eric Hagen, analyst at BTIG, in his April 3 Mortgage Finance Roundup.
The 30-year FRM averaged 6.64% as of April 3, down for the second consecutive week from 6.65%, the Freddie Mac Primary Mortgage Market Survey reported. Last year, it averaged 6.82%.
Meanwhile, this week the 15-year FRM followed suit and also was lower, dropping 7 basis points to 5.82% from 5.89%. A year ago at this time, the 15-year FRM averaged 6.06%.
Freddie Mac’s statement on this week’s survey did not mention the tariffs at all.
“Over the last month, the 30-year fixed-rate has settled in, making only slight moves in either direction,” said Sam Khater, Freddie Mac’s chief economist, in a press release. “This stability is reassuring, and borrowers have responded with purchase application demand rising to the highest growth rate since late last year.”
Zillow’s mortgage rate tracker was at 6.75% at 11 a.m. Thursday, up 1 basis point on the day, but down by 6 basis points compared with the previous week’s average rate of 6.81%
Lender Price product and pricing engine data on the National Mortgage News website was at 6.552%, also up 1 basis point on the day, but down from 6.83% seven days prior.
But according to Samir Dedhia, the CEO of One Real Mortgage, rates dropped more sharply today than what is being seen in the Freddie Mac data, falling to their lowest point since December.
“Investor anxiety over the economic impact of these tariffs triggered a sell-off in equities, pushing capital into safer assets like Treasury bonds and mortgage-backed securities — traditional safe havens during uncertain times,” Dedhia said, in comments on the Freddie Mac survey. “The rapid rate movement underscores just how sensitive the market is to policy headlines and geopolitical developments.”
The market uncertainty is also creating opportunity, Dedhia continued. But that is not a universal sentiment.
“Uncertainty and angst around tariffs continue to weigh on business and consumer sentiment,” Kara Ng, senior economist from Zillow Home Loans, said in a Wednesday evening statement.
“Mortgage rates create their own seasonality for the home shopping market,” Ng continued, comparing an increase in activity during late February and early March, to the increased engagement when rates fell last September.
“The home shopping season typically kicks off in spring to early summer, but with the recent dip in mortgage rates, there’s a possibility that this year’s home shopping season may begin slightly earlier,” Ng said.
However, comparing the current home purchase market to those in the past is not relevant if the analysis does not take into account today’s larger size, said Mark Fleming, chief economist at First American.
“The total number of U.S. households, which represents the demand for homes, is constantly growing,” Fleming said in an analysis. “So, an annual pace of 4 million existing-home sales today is, relatively speaking, much weaker than the same number 15 years ago, given the increase in demand.”
