Mortgage rates rose sharply last week, hitting levels not seen in months and increasing costs for prospective homebuyers during the busy spring season. Uncertainty stemming from international trade tensions and recent signals from the Federal Reserve appear to be driving the volatility.
The average rate for a standard 30-year fixed home loan reached 6.83% in the week ending April 17, according to one market observer. This marked the largest single-week jump in nearly a year, climbing from 6.62% just seven days prior. Other reports showed the rate at 6.81% with similar increases. By Saturday, April 19, the rate registered slightly lower at 6.79%, still significantly elevated from earlier in the month.
This increase follows a period where rates had been gradually falling, encouraging some buyers to enter the market. However, volatility returned as markets reacted to shifting economic signals.
A primary factor cited for the recent upward movement is renewed uncertainty surrounding trade policy. Reports indicate that the potential for escalating trade war measures has unsettled the bond market.
Mortgage rates often track the yield on the benchmark US 10-year Treasury bond. This yield spiked following last week's market movements, pushing borrowing costs higher for consumers seeking Mortgages. Market observers note this tariff turmoil has contributed to the rate climb.
Adding to market expectations, recent comments from the Federal Reserve Chairman suggested the central bank is not inclined to cut its key interest rate soon, particularly not to support the stock market. This stance dampens hopes for lower borrowing costs tied to Fed action and contributes to upward pressure on long-term rates like those for Mortgages. Jay Powell made it clear Fed is not going to rescue markets, impacting rate forecasts.
Higher rates are influencing buyer behavior. Total mortgage application volume declined last week, reflecting the dampening effect of increased costs. While purchase applications remain higher than a year ago, market analysts suggest the increase should be more substantial given the growth in available homes.
The climb in rates is also pushing more borrowers toward Adjustable-Rate Mortgages (ARMs). These loans offer lower initial interest rates compared to fixed-rate options but carry the risk of future payment increases. The share of ARM applications recently reached its highest point since late 2023, particularly among borrowers seeking larger loan amounts.
Refinance activity also saw a dip last week, though applications remain significantly higher than the same period last year when rates were elevated. Market experts caution that despite small daily moves, rate volatility is likely to continue in the current environment.
