Los Angeles, CA – As the spring homebuying season kicks off, mortgage rates in the United States have been on a downward trend in recent weeks. This decline comes at a time when the U.S. economy is exhibiting signs of slowing down and there is growing uncertainty surrounding the potential consequences of the Trump administration’s tariffs on imports. Despite the encouraging decrease in rates, analysts are cautious about predicting the future trajectory of mortgage rates given these prevailing economic conditions.

According to Freddie Mac, the average rate on a 30-year mortgage in the U.S. has seen a continuous seven-week decline, dropping from 7.04% in mid-January to 6.63% this week. This current rate marks the lowest level since December and is notably higher than the record low of 2.65% seen in January 2021. Additionally, rates for 15-year fixed-rate mortgages, favored by homeowners seeking to refinance at lower rates, have also decreased this week.

Mortgage rates are influenced by a variety of factors, including expectations for future inflation, global demand for U.S. Treasurys, and decisions made by the Federal Reserve on interest rates. The recent decrease in mortgage rates mirrors the movements in the 10-year Treasury yield, which lenders reference when pricing home loans. The bond market and global economic concerns revolving around the Trump administration’s tariffs have contributed to the decrease in mortgage rates.

While the lower mortgage rates may benefit homebuyers, uncertainties about inflation, Treasury yields, and Federal Reserve policies cast doubts on future trends. The decline in rates this year has not significantly boosted home sales, as evidenced by a drop in sales of previously owned homes in January. Pending home sales, a key indicator for future sales, also suggest potential further declines in the coming months.

Despite the challenges in the housing market, there has been a notable increase in mortgage applications in recent weeks, indicating that the decline in rates has prompted some buyers to take action. The increased inventory of homes and the slower rise in prices nationally have provided additional motivation for potential homebuyers. However, ongoing economic weaknesses and uncertainties may continue to deter buyers from entering the market.

Overall, while the current mortgage rate environment presents opportunities for home shoppers, external economic factors and policy decisions will play a significant role in shaping the housing market’s future. Analysts remain cautious about the impact of inflation, Treasury yields, and the overall economic health on the housing sector in the upcoming months.