Weekly Mortgage Rate Update 04-15-2024
Weekly Mortgage Rates
April 15,2025
Last week was one of the most volatile we have seen in a long time. The 10-year treasury increased by .50% with mortgage rates rising about .50% to .75%. Luckily, we start this week off with less volatility as tariff negotiations are underway and rates are improving.
Don’t be Tarrified
This week’s focus is on how the tariffs are impacting the bond market; in particular long-term bonds since these directly impact mortgage rates. But to put all this in perspective, I would point out that rates today are better than they were this time last year. The concern in markets is not the current rate, but the speed of change. Big shifts tend to have ripple effects in the broader economy and cause things to break.
Changing sentiment around bonds
A typical investment portfolio is some mix of both stocks and bonds because when stocks go down, usually bonds do better, which helps mitigate some of the pain. This is why we call bonds a safe haven asset. Money moves from riskier stocks to the safety of bonds during uncertain times. However, both stocks and bond prices fell after the tariff news. When bond prices fall rates rise.
This is reminiscent of 2022 when rates rose quickly due to inflation, causing the bond prices to drop as well as stocks. This is important for our longer-term outlook. Bond traders continue to get burned with bonds not providing that safe haven trade it once promised. This decreases appetite for bonds. Investors are requiring a premium to hold long term debt and offset the risk. Pricing in for a risk premium means there is a line in the sand where investors just won’t buy in at. We are seeing that now and this will continue to impact the direction for rates.
Choose your narrative
There was a lot of news to parse through last week. The goal of this weekly update is to gather the consensus from bond traders, economists, and analysts to give a digest of the current thinking. But there seemed to be a lot of confusion about why bonds sold off (causing rates to rise).
It did seem to catch the administration off-guard too, Many think it is what prompted them to do the 90-day tariff pause. Remember, we have 9 trillion in debt to refinance this year. A stated goal was to get the longer-term interest rates to move lower, but the opposite happened last week. Here are the main narratives out there about what caused the recent moves.
A liquidity issue- The selling of treasury bonds has been at least partially attributed to the need for some fast cash. This isn’t in my wheelhouse to discuss in depth but basically Wall Street firms and investors trade in futures and use highly leveraged debt to fund those bets. When things didn’t go as planned, those loans were called due. Selling treasuries is an easy way to come up with cash and at least partially responsible for the selloff in bonds. When this happens at scale it can have an impact.
U.S. losing its status as the global safe haven investment- This maybe the most controversial explanation and hard to prove. Last week’s 10-year treasury auction was met with good foreign demand, but the dollar is weakening. This is normally not the case for the dollar to weaken with rising bond yields. The mix of the dollar declining while rates increase is not unprecedented, but is still unusual.
But the Fed’s Neel Kashkari doesn’t seem to think it’s out of the question- “It could be that America is no longer the most attractive place to invest, or it could also be inflation outlook is rising. The dollar has been weakening which lends credibility to the story that investor preferences shifting.”
A simpler explanation is the market is re-pricing for high uncertainty and higher inflation. As we mentioned above, the appetite to take the risk in bonds on guessing the long-term outlook is not there after getting burned too many times. Probably it is a combination of all these things to some degree.
What’s ahead
Yesterday stocks improved and mortgage rates also improved, a trend that continues this morning. After a large move, a reversal is normal to see. The markets close early on Thursday and are closed on Friday for Good Friday. Perhaps this holiday shortened week will give some breathing room to digest things.
Lenders will be slow to pass on any improvements in rates to current pricing as we get closer to Thursday’s close as a lot can happen while markets are closed before Monday. But if things continue to improve and show stability, we could see some improvements in price next week.
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.