The current landscape for mortgage rates has seen a significant rise, with the average rate for a 30-year fixed mortgage climbing to 7.1%—a 13 basis point increase reported by Mortgage News Daily. This marks the highest level since mid-February.

Market Influences and Bond Yields

Mortgage rates have experienced considerable volatility this week, largely driven by fluctuations in bond yields. These yields initially surged after the implementation of President Trump’s new tariffs across various countries. However, an adjustment was made when the tariff rates were lowered for many nations shortly thereafter. Despite these adjustments, tariffs on imports from China remain notably high at 145%.

On Friday, bonds again faced a sell-off, which occurred despite a recent report indicating cooler-than-expected inflation. It is important to note that mortgage rates tend to closely track the yield of the 10-year Treasury bond.

Expert Insights on Recent Trends

Matthew Graham, Chief Operating Officer at Mortgage News Daily, remarked on the significant market movements, stating, “There have been some bad weeks for bonds here and there over the careers of most anyone who’s alive to read these words, but unless your career began before 1981, you just lived through the worst week you’ve ever seen in terms of the jump in 10-year yields.”

He further analyzed the current trading environment, explaining that it could either signify an end to a period of extreme volatility in bond yields or just another typical week that reflects the trend observed over the past year and a half.

Consumer Sentiment and Housing Market Outlook

In addition to the fluctuations in mortgage rates, a recent monthly report on consumer sentiment revealed significantly lower expectations than previously projected. Specifically, the anticipated inflation rate has risen sharply from 5% in March to 6.7% in April, the highest it has been since 1981.

These developments emerge at a critical time, coinciding with the spring housing market—a key period for home sales, as many view homeownership as their most substantial financial investment. Nancy Lazar, Chief Global Economist at Piper Sandler, noted on CNBC’s “The Exchange” that rising mortgage rates and employment concerns could lead to a weaker housing market, stating, “Forget about housing in this environment, with mortgage rates back up, consumers certainly concerned about the job market, housing will also be on the weak side.”