The April edition of the Mortgage Monitor Report—published by global financial services firm ICE—finds that home prices are cooling heading into the spring home-buying season. In another possible boon for buyers, the market expects that mortgage rates are on track to continue dropping, too.
Pricing in 30-year mortgage futures (or a contract to buy or sell an asset at a pre-determined price in the future), the report suggests, also indicates that the market anticipates 30-year mortgage rates to hit 6.4% by September 2025. For context: recent 30-year mortgage rates have fallen into the 6.6% range, which economists maintain is spurring home sales.
Andy Walden, head of mortgage and housing market research for ICE, writes in an email to RISMedia that tariffs implemented by President Donald Trump have been impacting mortgage rate projections as well.
The Mortgage Monitor report also said that, “The ramifications of on-again/off-again tariffs and the prospect of a trade war have added volatility to 10-year (U.S.) Treasury yields (interest rate the U.S. government pays to borrow money over a 10-year period), 30-year mortgage rates and the futures market.”
“The six-month outlook for mortgage rates shifted lower in response to the tariffs announcement, with Friday, April 4, ICE Futures data implying an additional ~25 basis points improvement in 30-year mortgage rates over the next six months, falling to around 6.25% by September,” says Walden.
Greg McBride, chief financial analyst for Bankrate, told The Washington Post that uncertainty over tariffs prompted investors to move money to bonds. That, in turn, prompted the drop in mortgage rates.
Mortgage refinance rates are projected to “modestly” increase if mortgage rates do fall into the mid-6% range. The refinance incentive “could spike” if mortgage rates do hit the low-6% range, the report said.
According to ICE, the April Mortgage Monitor’s data on 30-year mortgage futures pricing “implies” the market had been expecting a dip in interest rates—before the tariffs were announced.
Tariffs are an inflationary tax, and Federal Reserve Chair Jerome Powell said last Friday he expects a bump in inflation because of the tariffs, potentially moving further away from the Fed’s 2% inflation goal. Despite pressure from Trump to cut interest rates, the Fed has maintained a “wait-and-see” attitude to cutting interest rates
“ICE rate lock data shows 30-year fixed mortgage rates have dipped by 1/8% to 1/4% from their March levels in recent days, falling to 6.5% on Friday, April 4. Despite the decrease, mortgage rates haven’t mirrored the full decline in 10-year Treasury yields, with spreads widening by 5 – 10 bps,” said Walden.
Rumors, now debunked, of a potential 90-day pause in tariffs drove 10-year treasury yields higher, Walden notes, though the market boost from the pause rumor dissipated once the truth was clarified.
Apart from tariffs, ICE saw some positive signs for housing last month, including listings up 27% from a year ago and eight consecutive weeks of rising mortgage applications.
For the full Mortgage Monitor report, click here.
