Author: Eric BernsteinPublished:
Last week was a tough pill to swallow for prospective homebuyers and most people at the cusp of a refinance. Many (including me) were ready for rates to keep dropping, but a sharp turn in US treasuries sent those plans out the window.
President Trump was forced to walk back most of the tariff medicine he boldly prescribed the week prior, and while the stock market was relieved, the bond market (and mortgage rates) were not - thanks to China.
Not even a great CPI report was enough to save mortgage rates last week.
The average rate on a 30-year fixed rate conventional loan jumped to 6.895% - up from 6.48% just the week before. In just 1 week, we went from rates being at the lowest level in 6 months to erasing almost 3 months of rate decline!
There is a silver lining though, with the news announced yesterday lifting China reciprocal tariffs on elections, mortgage rates may drop this week as tariff tensions ease. Sign up for our weekly Friday rate texts to stay in the know on where rates are week by week! It's a must for anyone planning to buy or refinance in 2025!
Trade Tensions
President Trump's announcement last week of a 125% tariff on Chinese imports has intensified global trade uncertainties. This move led to a significant sell-off in U.S. Treasuries, with yields on 10-year notes reaching a seven-week high. China, as a consequence of the Trump's tariffs, may be one of the big sellers. Keep in mind, China is the second-largest foreign owner of US Treasury bonds, after Japan, and has been selling down for some time, at least according to official data.
The bond market's reaction underscores concerns about the stability of U.S. assets amid aggressive trade policies. Despite a temporary 90-day pause on some tariffs, investor confidence remains shaken, as evidenced by the continued volatility in financial markets.
Trump's tariffs are changing minute-by-minute and the market just cant get behind any of these decisions. The on again off again drama of it all is causing companies to be unable to make informed decisions.
A Great CPI Report Didn't Help
The March CPI report came in wayyyy better than expected, but it wasn't enough to stop the damage caused by global trade tensions. The 12-month inflation rate was just 2.4%, down from 2.8% in February and better than the 2.6% expected. Core inflation, which excludes food and energy, was at the lowest point since March 2021.
So, why didn't we see rates fall?
Because the CPI report measures past inflation, which doesn't alleviate the new concerns of future inflation caused by tariffs and China/US tensions.
Boston Fed President Susan Collins anticipates inflation will exceed 3% in 2025, above the Fed's 2% target, while also expressing a readiness to stabilize financial markets if necessary. Even Chicago Fed President Austan Goolsbee warned of potential stagflation, with rising prices and job losses occurring concurrently, a scenario lacking clear policy responses.
Where the Fed was ready to cut rates to save jobs last week, it now appears that the Fed is willing to keep rates high to fight inflation, even if that means the labor market gets weaker in the process, at least that's how Jeff Schmid, president of the Federal Reserve Bank of Kansas City, feels.
So...where are mortgage rates heading?
EVERYTHING I wrote about last week is already stale. The market has not only ruled out a May rate cut, but even a June rate cut currently seems out of reach. The bond market is too volatile to predict.
I do believe that we saw rates come up a bit too much in the last week and, from what I'm seeing this morning in the bond market, we are likely to see at least a little relief today- but for how long that lasts or how low rates fall, I can't say.
The markets are in full blown panic and it's easy to get caught up in that panic. PLEASE DON'T! Remember that the stock market can recover just as quickly as it falls (like in 2020 and 2022) and the stock market is NOT the economy! Most importantly - please do not read the comments on social media posts and believe them to be from credible sources! If you have questions, contact your financial advisor (or trusted friend or family member or even me), not an anonymous account.
President Trump was forced to walk back most of the tariff medicine he boldly prescribed the week prior, and while the stock market was relieved, the bond market (and mortgage rates) were not - thanks to China.
Not even a great CPI report was enough to save mortgage rates last week.
The average rate on a 30-year fixed rate conventional loan jumped to 6.895% - up from 6.48% just the week before. In just 1 week, we went from rates being at the lowest level in 6 months to erasing almost 3 months of rate decline!
There is a silver lining though, with the news announced yesterday lifting China reciprocal tariffs on elections, mortgage rates may drop this week as tariff tensions ease. Sign up for our weekly Friday rate texts to stay in the know on where rates are week by week! It's a must for anyone planning to buy or refinance in 2025!
Trade Tensions
President Trump's announcement last week of a 125% tariff on Chinese imports has intensified global trade uncertainties. This move led to a significant sell-off in U.S. Treasuries, with yields on 10-year notes reaching a seven-week high. China, as a consequence of the Trump's tariffs, may be one of the big sellers. Keep in mind, China is the second-largest foreign owner of US Treasury bonds, after Japan, and has been selling down for some time, at least according to official data.
The bond market's reaction underscores concerns about the stability of U.S. assets amid aggressive trade policies. Despite a temporary 90-day pause on some tariffs, investor confidence remains shaken, as evidenced by the continued volatility in financial markets.
Trump's tariffs are changing minute-by-minute and the market just cant get behind any of these decisions. The on again off again drama of it all is causing companies to be unable to make informed decisions.
A Great CPI Report Didn't Help
The March CPI report came in wayyyy better than expected, but it wasn't enough to stop the damage caused by global trade tensions. The 12-month inflation rate was just 2.4%, down from 2.8% in February and better than the 2.6% expected. Core inflation, which excludes food and energy, was at the lowest point since March 2021.
So, why didn't we see rates fall?
Because the CPI report measures past inflation, which doesn't alleviate the new concerns of future inflation caused by tariffs and China/US tensions.
Boston Fed President Susan Collins anticipates inflation will exceed 3% in 2025, above the Fed's 2% target, while also expressing a readiness to stabilize financial markets if necessary. Even Chicago Fed President Austan Goolsbee warned of potential stagflation, with rising prices and job losses occurring concurrently, a scenario lacking clear policy responses.
Where the Fed was ready to cut rates to save jobs last week, it now appears that the Fed is willing to keep rates high to fight inflation, even if that means the labor market gets weaker in the process, at least that's how Jeff Schmid, president of the Federal Reserve Bank of Kansas City, feels.
So...where are mortgage rates heading?
EVERYTHING I wrote about last week is already stale. The market has not only ruled out a May rate cut, but even a June rate cut currently seems out of reach. The bond market is too volatile to predict.
I do believe that we saw rates come up a bit too much in the last week and, from what I'm seeing this morning in the bond market, we are likely to see at least a little relief today- but for how long that lasts or how low rates fall, I can't say.
The markets are in full blown panic and it's easy to get caught up in that panic. PLEASE DON'T! Remember that the stock market can recover just as quickly as it falls (like in 2020 and 2022) and the stock market is NOT the economy! Most importantly - please do not read the comments on social media posts and believe them to be from credible sources! If you have questions, contact your financial advisor (or trusted friend or family member or even me), not an anonymous account.
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Key reporting dates this week:
Mon, 4/14: Fed Presidents speaking
Tues, 4/15: Tax day 😡, Import price index,
Wed, 4/16: U.S. retail sales, Business inventories, Home builder confidence index
Thurs, 4/17: Initial jobless claims, Housing starts, Building permits
Fri, 4/18: San Francisco Fed President Mary Daly speaks
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About the Author:
Eric Bernstein is the President and Co-Founder of LendFriend Mortgage, where he helps homebuyers make smarter, more confident decisions in today’s fast-moving housing market. With over a decade of experience guiding hundreds of clients—from first-time buyers to seasoned investors—Eric brings a mix of market insight, strategy, and personalized service to every mortgage transaction. Each week, Eric breaks down the housing and economic headlines that matter, giving readers a clear, no-fluff view of what’s happening and how it might impact their buying power.