Mortgage rates had been trending downward for much of 2025, but that’s changed in the past week as markets digest the impacts of a global trade war and investors speculate that the Federal Reserve could lose its independence.
At HousingWire’s Mortgage Rates Center on Tuesday, 30-year conforming rates averaged 6.98% — up 20 basis points (bps) from one week ago and the highest rate since the end of February. And 15-year conforming rates have shot up 38 bps in the past week to reach 6.88%.
Rates had reached a 2025 low point on April 11, when 15-year and 30-year rates averaged 6.38% and 6.69%, respectively.
What will happen to home sales?
The upward movement serves as a bucket of cold water for a housing market that has had a relatively healthy level of activity at the start of the spring purchase season.
Altos data released Monday showed that weekly pending single-family home sales rose slightly compared to year-ago levels as the inventory of unsold homes for sale grew by 17,000. This prompted Altos President Mike Simonsen to write that the “base case for April, May and June this year is that we should continue to see home sales gains versus 2024. There is more supply now and it’s slightly cheaper to buy.”
HousingWire Lead Analyst Logan Mohtashami also presented a relatively rosy forecast in his weekly housing tracker data released Saturday. Purchase mortgage application volume dropped by 5% during the past week but remains 13% higher on a yearly basis. The mortgage market has seen seven positive application prints in the first 13 weeks of the year.
Mohtashami noted that the spread between 10-year Treasury yields and 30-year mortgage rates — which currently sits at 2.45% — remains elevated from the historic averages of 1.6% to 1.8%. But the figure is also much lower compared to the early months of 2023 when the regional banking crisis rattled the nation.
“It’s understandable to feel concerned, especially considering that if spreads were as unfavorable as they were in 2023, we could be facing mortgage rates close to 8%,” Mohtashami wrote. “This situation would have made it incredibly difficult for anyone looking to buy a home, or sell and buy a house.”
Trump-Powell showdown
The main driver of the surge in mortgage rates appears to be the heated public battle between President Donald Trump and Federal Reserve Chair Jerome Powell.
Trump has renewed his attacks on Powell over the past week as he seeks to pressure the Fed into lowering benchmark interest rates. Investors have responded with a stock selloff that has wiped out trillions of dollars in value. Treasury yields have moved higher and so have mortgage rates.
The president’s remarks cut against the longstanding notion of Fed independence from executive branch influence. Powell has said in the past that he doesn’t believe Trump has the authority to fire him, but a pending Supreme Court case involving two recently fired federal agency board members could reshape legal precedent if the justices rule in favor of the president.
The Wall Street Journal editorial board noted this week that even if Trump successfully fired Powell, he would still have to contend with the other members of the Federal Open Market Committee who’ve been closely aligned on interest rate policy.
Powell’s current term as Fed chair ends in May 2026. Reports have emerged that his successor — either sooner or later — could be former Fed governor Kevin Warsh. Trump had reportedly considered Warsh for the role of Treasury secretary before selecting Scott Bessent, and Warsh was also a candidate to lead the Fed during Trump’s first term.
Lock-in effect loosens grip
The U.S. Census Bureau and U.S. Department of Housing and Urban Development will release new-home sales figures for March on Wednesday. This data doesn’t include the full impact of President Trump’s global tariff policies, which weren’t implemented until April 2 and have been paused in many cases.
In February, new-home sales rose 1.8% from the prior month and 5.2% from a year ago. But housing market observers expected tariffs to stall progress in the coming months.
Similar patterns may emerge for existing-home sales, as the National Association of Realtors (NAR) will release its data for March on Thursday. February sales were positive, up 4.2% from the prior month for an annualized rate of 4.26 million. But they remain down 1.2% compared to February 2024, when mortgage rates were higher than they are today.
First American’s forecast calls for an increase in existing-home sales that would push them above the pace of March 2024. In written commentary, deputy chief economist Odeta Kushi said that housing remains “handcuffed,” but there is good news as the persistent mortgage rate lock-in effect is easing.
Kushi cited Federal Housing Finance Agency data showing that the share of outstanding mortgages with rates below 6% has decreased from 93% in second-quarter 2022 to 82% in fourth-quarter 2024.
The average interest rate on outstanding mortgage debt at the end of last year was 4.3%, or 2.3 percentage points lower than the prevailing mortgage rate of 6.6%. That translates to a difference of roughly $400 in the monthly payment on a median-priced existing home — still a significant barrier to many prospective homebuyers but much smaller than the gap of roughly $700 per month at the end of 2023.
“The rate lock-in effect will continue to limit housing market potential, but it has loosened enough for some potential sellers to list their homes for sale and contribute to higher for-sale inventory and more sales activity,” Kushi said.
First Time Home Buyer FAQs - Via HousingWire.com
