Rates for home loans dipped, but consumers’ economic uncertainty continues to weigh down the housing market.
In the week ending May 1, 30-year fixed-rate mortgages averaged 6.76%, down from 6.81% last week, Freddie Mac said. That’s right in line with the year-to-date average of 6.80%.
Those figures don’t include fees or points, and rates in some parts of the country may be higher or lower than the national average.
It’s increasingly hard to estimate how high or low mortgage rates will go. They follow the direction of the U.S. 10-year Treasury note, since they are held for roughly the same amount of time: the average age of outstanding home loans is 6.26 years, according to an April analysis by ICE Mortgage Technology, a division of Intercontinental Exchange, Inc., for USA TODAY.
But predicting the path of the 10-year note may be even more challenging.
Bond yields – rates – rise when prices fall. In recent weeks the Trump administration’s trade war has raised concerns that American assets are no longer as desirable for global investors as in the past. Foreigners own 30% of outstanding Treasuries, according to an analysis by Apollo Global Management, and a period of heavy selling in mid-April caused Treasury yields to surge.
That’s a reversal from what normally happens when the economy weakens, which is what most analysts are concerned about now. As investors buy “safe haven” assets, they push prices up and yields fall. Reduced borrowing costs, in turn, help spark more growth, as people take out loans to fund businesses and other purchases.
Right now, the concern is that businesses and consumers are simply too anxious to do any borrowing – or buying.
Most notably, lower mortgage rates aren’t enticing people to buy. “Mortgage applications fell for the second consecutive week as uncertainty continues to impact many buyers’ decisions to enter the housing market,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association, a trade organization.
A measure of home tours and other homebuying services from Redfin agents is 2% lower than at this time last year, despite mortgage rates being lower than in 2024. Its April tracker of pending home sales, or contract signings, is 2.8% lower.
Bliss Ong, a Redfin Premier agent in Seattle, believes many people are too nervous to make a move.
They want to ride out this period of economic uncertainty and wait until they feel more secure to make this huge financial decision,” Ong said in a press release accompanying Redfin’s data.
For now, the housing market is in wait-and-see mode. When buyers are more reluctant, sellers may be more willing to offer concessions and price cuts. That means anyone brave enough to take a chance might find a bargain.
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