Mortgage Rates Fluctuate Amid Economic Uncertainty, Tariff Policies

On April 29, 2025, mortgage refinance rates experienced significant fluctuations, mirroring broader economic uncertainties and policy changes. The average rate for a 30-year fixed mortgage decreased slightly to 6.86% for purchase and 6.83% for refinance, down from the previous week's 6.89% for purchase and 6.86% for refinance. This minor decline offers some respite to homeowners and prospective buyers who have been dealing with elevated rates in recent months.

The 10-year fixed refinance loan rate saw a substantial increase of 609 basis points over the past week, now averaging 6.09%. This sharp rise highlights the mortgage market's volatility, influenced by factors such as tariff policies, Federal Reserve actions, and financial market responses. In contrast, the 15-year fixed mortgage rate remained stable at 5.94%, offering a middle ground for those seeking a balance between shorter-term and longer-term loans.

The trajectory of mortgage rates is significantly impacted by the administration's tariff agenda, the Federal Reserve's interest rate policies, and overall financial market conditions. Recent tariff policies have caused mortgage rates to fluctuate between 6.5% and 7% in recent weeks, leading to a decrease in homebuying demand. The total volume of home loan applications dropped by 12.7% in just one week as many potential borrowers adopt a cautious approach, awaiting clearer economic signals before making major financial decisions.

The Federal Reserve's upcoming meeting in early May will be pivotal in shaping the future of mortgage rates. The central bank has paused interest rate cuts until there are clear signs of an economic slowdown. If April's labor data indicates increased unemployment and declining economic growth, the Fed may lower interest rates in late spring or early summer. Conversely, if inflation rises due to tariffs, the Fed might delay rate cuts, further complicating the outlook for mortgage rates.

The possibility of a recession in 2025 adds another layer of uncertainty. Historically, economic downturns have led to lower mortgage rates as investors seek safer investments like US Treasury bonds. However, declining investor confidence in the US economy could disrupt this pattern, potentially leading to higher yields and mortgage rates. Additionally, a recession could limit the benefits of lower mortgage rates, as households facing job losses and tighter budgets may be less likely to purchase a home.

For those considering a home purchase, experts advise focusing on key fundamentals such as creating a realistic homebuying budget and shopping around for the best mortgage rates. While waiting for rates to drop further may seem tempting, the large-scale economic issues affecting the housing market are beyond individual control. Therefore, potential homebuyers should weigh their personal financial situation and long-term goals when deciding whether to buy now or wait for more favorable conditions.