Realtor.com writes, "Mortgage rates swung up on Thursday compared to the previous week, inching toward the dreaded 7% level, following the recent surge in 10-year-Treasury yields driven by investor concerns about escalating global trade tensions.
The average rate on 30-year fixed home loans increased to 6.83% for the week ending April 17, up from 6.62% the previous week, according to Freddie Mac. It is the largest one-week increase in 12 months. Rates average 7.1% the same week in 2024.
"The 30-year fixed-rate mortgage ticked up but remains below the 7% threshold for the thirteenth consecutive week," says Sam Khater, Freddie Mac’s chief economist. "At this time last year, rates reached 7.1% while purchase application demand was 13% lower than it is today, a clear sign that this year's spring homebuying season is off to a stronger start."
Last week, mounting uncertainty surrounding the Trump Administration’s tariff policies and increasingly tense international relations between the U.S. and its trading partners set off a drastic sell-off in government bonds.
As a result, the 10-year Treasury yield surged to 4.5%. That’s important, because the 10-year yield serves as a key benchmark for mortgage rates. In other words, if the yield rises, typically the 30-year mortgage rate follows suit.
The good news for prospective home sellers and buyers is that the markets have settled down this week, with 10-year yields retreating to about 4.3%.
"Looking ahead, the potential impact of tariffs on both inflation and broader economic softening remains unclear,” says Realtor.com® Economist Jiayi Xu. "This uncertainty adds to ongoing speculation about the Fed’s next move on interest rates, the direction of the 10-year treasury yield, and, ultimately, where mortgage rates are headed."
While many homeowners still feel "locked in" by elevated mortgage rates in the high-6% range, their patience is wearing thin, signaling that many might be ready to come off the sidelines and let go of their lower rates.
According to a recent Realtor.com survey, 78% of potential sellers expect interest rates to either remain the same or rise in the next 12 months, suggesting that waiting to list their home may not pay off.
“As a result, we're seeing an ongoing rise in new listing activity, especially as we are in what is the best week of the year to sell," says Xu.
Competing economic forces are pulling mortgage rates in opposite directions, making it increasingly difficult to predict where they’ll end up.
Xu suggests that homebuyers should "stress test" their budgets across a range of possible interest scenarios, both higher and lower, so they’re prepared to make a move "no matter which way the winds shift."
Whether lower mortgage rates would spur prospective homebuyers to make a move this year remains an open question, considering the great deal of uncertainty surrounding the controversial tariff policy and its impact on the stock market.
"There has been encouraging news in recent months, even during these high mortgage rates, that home sales are picking up relative to a slow 2024," says Berner. "This week’s minor bit of relief may be enough to keep up this positive momentum, or the fallout from the tariff announcement may shake buyers’ confidence."
How mortgage rates are calculated
Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.
So when the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to go up. Conversely, when Treasury yields decrease, mortgage rates fall.
The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account. Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.
Mortgage applications dipped by 2% from a week ago, according to the latest data from the Mortgage Bankers Association’s Weekly Mortgage Application survey ending on March 21.
During the same period, purchase applications, involving the offer and agreement to buy a property, increased 1% from a week ago and 7% year over year, driven by a surge in FHA loan applications, according to Joel Kan, MBA’s vice president and deputy chief economist.
How your credit score affects your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you'll receive. The higher the credit score, the lower the interest rate you'll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a "fair" rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. They want to make sure you're able to pay back the loan."
Source: Realtor.com
Written by: Snejana Farberov
Published: April 17, 2025
Posted by Grossman & Jones Group on
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