Trump's economic policy driving mortgage rates

Mortgage rates declined for the first time in three weeks but remained in the same tight range it has for all of March, as uncertainty rules the market.

As of March 27, the 30-year fixed-rate mortgage averaged 6.65%, down two basis points from 6.67% the previous week and 12 basis points lower than the 6.79% recorded during the same period in 2024, according to the Freddie Mac Primary Mortgage Market Survey.

Meanwhile, the 15-year FRM increased by 6 basis points versus last week, to 5.89%. But that was 22 basis points lower than 6.11% one year ago.

"Recent mortgage rate stability continues to benefit potential buyers this spring, as reflected in the uptick in purchase applications," Sam Khater, Freddie Mac chief economist, said in a press release.

The market was short on clarity and high on anxiety and this is why mortgage rates moved very little during the period, Kara Ng, senior economist at Zillow Home Loans, said in a Wednesday afternoon statement.

The small movement, up or down, in rates is giving the home purchase market "a welcome sense of stability," said Samir Dedhia, CEO of One Real Mortgage.

Besides the uncertainty over tariffs, a second factor contributed to the increase in the PMMS. "Persistent inflationary signals in recent economic data have led investors to expect a more cautious approach from the Federal Reserve," Dedhia said.

In what could be construed as a sign of lack of investor confidence in the U.S. economy, the 10-year Treasury, one of the benchmarks used to price mortgages, was four basis points higher on the day as of 11 a.m. eastern time to 4.38%. This is also 15 basis points higher than its close on March 20 of 4.33%.

At that time, Zillow's mortgage rate tracker was down two basis points on the day to 6.81%, but it was also up by 6 basis points from the previous week's average rate of 6.75%.

Lender Price data on the National Mortgage News website was at 6.83%, up from 6.763% one week earlier.

In his March 26 mortgage finance roundup, BTIG analyst Eric Hagen noted that rates were hovering around 6.5%, with the spreads between mortgage-backed securities and Treasurys at 140 basis points.

Hagen noted that non-bank originators and servicers could see a short-term boost if the 10-year Treasury nears its 4.20% resistance level. However, he expects a steeper yield curve to be more beneficial for stocks later this year and into 2026, as long-term interest rates are likely to rise following the Treasury's latest refunding strategy, which shifts more debt into long-term securities rather than the short-term T-Bills that dominated issuance over the past 2.5 years.

But the fact that rates are still closer to December's lows versus January's high point could start the Spring home purchase season slightly earlier than normal, Ng said.

Still, it is hard to predict how mortgage rates will move with any conviction in that prognostication.

"Even announced policies may be postponed or revoked at any time," she said. "Uncertainty is high, and markets are fracking for clarity, so any data surprise has the potential to swing mortgage rates up or down."