The average top tier 30yr fixed rate is set to end the week just a few hundredths of a percent higher than last Friday at 6.92%.  That's a victory--albeit a small one--after hitting 6.99% on Wednesday. As always, these rates refer to an index representing broad industry averages for best-case scenarios. Individual lenders and scenarios can be quite a bit different for a variety of reasons. Today's rate change is a bit misleading because it left us in slightly better shape versus yesterday. The bond market (which is directly responsible for mortgage rate changes) disagrees. Whether we're talking about mortgage-specific bonds or their more popular older sibling US Treasuries, bonds were just a hair weaker across the board. Weaker bonds = higher rates, all other things being equal. The discrepancy comes down to timing and the rate setting practices of mortgage lenders. Specifically, bonds improved late enough in the day yesterday that many lenders didn't fully adjust their mortgage rates to reflect the gains.  Then this morning, bonds signaled even lower rates before ultimately moving back to more neutral levels.  Some lenders bumped rates slightly higher as a result, but the average lender is still slightly below yesterday's rates and bond market levels are still slightly better than they were when most lenders released their last rate update yesterday. If this is all a bit confusing, remember that mortgage rates only change once or twice a day, apart from extremely volatile trading days. Meanwhile, the bond market is changing every second. Lenders have to decide where to set rates based on that moving target.  Here's how the past two days looked to the average lender:

Mortgage rates have done almost nothing but move higher in the month of May. The latest bump--seen yesterday--took the average top tier 30yr fixed rate to 6.99%. While this is fairly uneventful in the bigger picture, it was a noticeable increase from the 6.81 seen at the end of April, or the slightly lower range  before that. Today's improvement was modest, but at least it was an improvement.  And at least it prevents us from needing to write headlines about an official break above the 7.0% level.  As for motivations, the bond market (which dictates rates) improved after a slew of economic data this morning and a speech from Fed Chair Powell. In terms of timing, more of the improvement happened after Powell, but it's impossible to know if traders weren't simply waiting for the morning's key events to transpire before fully reacting. The average lender is about 0.05% lower than yesterday.  Most lenders began the day roughly in line with yesterday and then made a mid-day adjustment in response to the bond market gains.

In early April, amid the most volatile portion of the market's reaction to the tariff announcement, mortgage rates were officially over 7% for a single day. By the middle of the following week, they were well on their way lower, ultimately ending the month just over 6.8%. Since then, it's been tough sledding for bonds and the rate market. Almost every day in the month of May has been a bad one.  Even if the size of the rate increases have been reasonably small, they're starting to add up.  Now today, the average lender is back on the doorstep of 7% for top tier conventional 30yr fixed mortgage rates.  A second wave of weakness in the bond market this afternoon is resulting in many lenders announcing mid-day increases.  With that, today's index ended up at 6.99%--all this despite an absence of any standout individual motivations in today's news. Tomorrow brings a slew of important economic reports.  If they come in stronger than expected, rates could face additional upward pressure.  If they're weaker, markets may dismiss them as stale data that was overly influenced by tariff-related uncertainty that has since improved. 

Tuesday brought the release of an economic report that has frequently been responsible for big swings in mortgage rates. The Consumer Price Index (CPI) is the earlier of the two big inflation reports from the US government, and inflation is a big deal for interest rates.  In general, higher inflation coincides with higher rates and vice versa. But today's CPI data was likely to be taken with a grain of salt due to the to-be-determined impacts of tariffs and trade deals on the price of imported goods and materials. In other words, if inflation came in lower than expected, it wouldn't matter as much as normal because. The only real risk was that inflation would come in higher than expectations, thus suggesting that any tariff-related impact would be hitting an already elevated price trend. Thankfully, today's report was slightly lower than expected, even though it moved up from last month's levels. As expected, that didn't do anything to help rates. In fact, the average lender is just a hair higher than yesterday owing to market movement that happened later in the day.

Tariffs and trade policy have been a new and important consideration for the bond market for just over a month now. That matters to mortgage rates because mortgage pricing is primarily determined by bond prices.   The reaction function for rates is a bit complicated at first glance because tariffs can exert influence in opposite directions. To whatever extent trade policy results in lower economic growth, it would generally be good for rates, all other things being equal. To whatever extent trade policy results in higher prices, lower revenue, and lower foreign demand for US assets (which tends to correlate with trade relationships), it would push rates higher.  Over the weekend, the US and China agreed on a 90 day pause on the more extreme tariff brinksmanship.  While levels remain elevated enough to cause some inflation concern (remember: bad for rates), they've come down enough to alleviate some concern about the global economy (also bad for rates).  Today's move wasn't huge as far as mortgage rate volatility goes, but the average lender is now up to the highest levels in just over 2 weeks. [thirtyyearmortgagerates]