Mortgage rates are influenced by the broader bond market, especially the 10-year U.S. Treasury yield. When bond yields rise, mortgage rates often follow.
Rates had been trending downward for several weeks earlier this year, but recent market volatility pushed them slightly higher again.
Even with the recent movement, mortgage rates remain lower than they were at several points in 2024, which has helped bring some buyers back into the market.
One of the biggest factors affecting markets this week was rising geopolitical tension involving Iran and the Middle East.
When global tensions increase, markets often react quickly. In this case, the concern has been around potential disruptions to global oil supply. Oil prices rose earlier in the week as investors reacted to the possibility of supply issues.
Higher energy prices can lead to higher inflation expectations, and inflation is one of the main drivers of mortgage rates. When investors worry about inflation, they often sell bonds, which pushes bond yields-and mortgage rates-higher.
Because of this chain reaction, mortgage rates moved slightly upward this week.
Despite the recent rate volatility, the housing market continues to show signs of stabilization.
Some trends we’re seeing include:
Buyers returning to the market as rates improve from previous highs
Continued inventory shortages in many areas
Sellers adjusting pricing expectations as the market normalizes
Many buyers are finding that when mortgage rates settle into a predictable range, activity tends to increase again.
Over the coming weeks, financial markets will likely be watching several things closely:
Developments in global energy markets
Inflation data releases
Movement in long-term Treasury yields
Signals from the Federal Reserve about future interest rate policy
If inflation pressures ease and global markets stabilize, mortgage rates could resume the gradual downward trend seen earlier this year.
Mortgage rates briefly dipped but moved slightly higher again this week as global events affected financial markets. While short-term volatility is always possible, many buyers are still moving forward when they find the right home and financing strategy.
If you’re considering buying, refinancing, or just want to understand your options, it can be helpful to speak with a mortgage professional about current programs and strategies.
Mortgage Outfitters LLC | NMLS #2669832 | Equal Housing Opportunity
