- Mortgage rates hit their lowest level since October amid the tariff-fueled market tumult.
- Buyers wasted no time taking advantage of the dip.
- But a spike in bond yields this week could make the reprieve short-lived.
Tariffs are driving chaos across markets, but the tumult is bringing some relief for US home buyers.
Mortgage rates have touched their lowest level since October, with the 30-year fixed rate falling to 6.61% last week, according to data published Wednesday by the Mortgage Bankers Association.
Loan rates closely track the Treasury yields, and have fallen sharply amid last week’s decline. The benchmark 10-year yield sank below 4% last Friday, as unexpectedly tough tariffs from the Trump administration prompted investors to buy bonds.
With borrowing costs falling, housing market activity has ballooned. MBA-tracked mortgage application volumes surged 20% through Friday, reaching a September high. Meanwhile, refinance applications roared to a six-month high.
“Both homebuyers and refinance borrowers were quick to take advantage of this dip in rates, driving the purchase index 24 percent higher than a year ago to the strongest pace since January 2024,” Joel Kan, MBA’s Vice President, said in a press release.
The data offers a reprieve for a market that’s slowed dramatically. High mortgage rates and pricing unaffordability have slashed homebuyer appetite, pushing pending home sale inventory to a five-year high in February.
However, the relief of lower mortgage rates could be short-lived.
The 10-year Treasury yield is already spiking higher again; by Wednesday, it returned to levels not seen since mid-February. Tariff uncertainty and a tit-for-tat trade war with China is causing investors to forgo these long-dated assets.
Analysts have previously signaled skepticism that mortgage lows would ever last. If anything, the market is bound to be volatile, as tariff-induced inflation worries cause drive bond yields back and forth.
Even if borrowing costs fall lower more permanently, levies are expected to boost housing prices as much as $9,200 per home. Meanwhile, demand may continue to suffer amid recession fears and consumer hesitancy.
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