Mortgage Rates Climb Amid Economic Uncertainty
Renewed concerns over tariffs and the broader economy drove Treasury yields higher last week, causing mortgage rates to follow suit. Consequently, total mortgage submission volume experienced a 10% drop compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, capped at $806,500 or less, increased to 6.82% from 6.77%. Points remained unchanged at 0.62, inclusive of the origination fee, for loans with a 20% down payment.
“Treasury yields finished higher last week on average despite an intra-week drop, driven partly by renewed concerns of the impact of tariffs on the economy,” stated Joel Kan, vice president and deputy chief economist at the MBA.”Consequently, mortgage rates rose after two weeks of declines, which contributed to slower application activity.”
Applications for a mortgage to purchase a home fell 12% for the week and were 13% higher than the same week one year ago. This marks the slowest pace since May. The housing market has observed an increase in inventory as the start of the year, but even potential sellers are beginning to withdraw as buyer demand retreats and home prices soften.
Jumbo rates were lower than conventional rates for the third consecutive week,potentially indicating that some depositories are positioning themselves for growth in balance sheet lending,according to Kan.
Applications to refinance a home loan dropped 7% for the week and were 25% higher than the same week one year ago.
“Refinance applications also dipped because of higher rates, with refinance applications falling, led by VA refinances partially reversing their previous week’s gain, dropping 22 percent,” Kan added.
Mortgage rates continued their upward trend to start this week, despite a slightly hotter-than-expected inflation report.
“We knew there was a possibility of two separate reactions–one for the top line CPI numbers and one for a deeper look at the internal components,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “Those internals show that tariffs are having an impact even though it was a smaller impact than many forecasters were expecting.”
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