Breaking a seven-week trend, average 30-year mortgage rates have ticked upward, settling at 6.65% for the week ending March 13, as reported by Freddie Mac. This represents a small increase from the previous week’s 6.63% and is still lower than the 6.74% average from the same time last year. While this change might seem small, it ends a long streak of falling rates and, therefore highlights just how uncertain things still are in the housing market.
U.S. weekly averages as of 03/13//2025
Factors Influencing Mortgage Rates
Mortgage rates are shaped by various economic factors, including investor’s concerns about inflation, global demand for U.S. Treasury bonds, and decisions made by the Federal Reserve regarding interest rates, among other things. In recent weeks, declining rates were, indeed, following the path of the 10-year Treasury yield. The yield was close to 4.8% at the beginning of the year and has continued to lower until just recently changing course by ticking upward.
Tariffs, Stock Market Volatility, and the Feds’ Impact on Mortgage Rates
Expectations for the global economy, marked by unpredictable trade policies and ongoing tariff conflicts, have added challenges to the overall situation. This has been especially highlighted by the recent concerns over economic growth following the tariff policies introduced by the Trump Administration that disrupted trade relationships with Canada and Europe. This included a proposed 50% tariff on Canadian steel and 200% tariffs on European wine.
Related Article: High Mortgage Rates Drive Up Demand for Rental Properties
Added to the mix is Wall Street – mortgage rates can decrease when the stock market dips, as investors move funds into what they feel are safer assets like bonds. However, as seen this week, mortgage rates did not drop even though we saw significant stock market losses. Analysts suggest this could be linked to fears that inflation could remain elevated due to rising costs of goods driven by tariffs.
Samir Dedhia, CEO of One Real Mortgage, highlighted the role of uncertainty in driving this week’s mortgage rate increases, by stating: “If new tariffs drive up costs for goods and materials, inflation could remain elevated for longer than expected, prompting the Federal Reserve to maintain a more cautious approach toward rate cuts.”
Regarding this, while addressing concerns about tariffs, Fed chief Powell maintained that the U.S. economy is in a stable position and does not currently require immediate intervention. His statements increased expectations that the Federal Reserve will leave its key interest rate unchanged for the next rate meeting, leaving an additional rate cut off the table.
Where Does the Housing Market Stand in All This?
Mortgage rates are still a factor in buyer and seller hesitation. Maybe, at some point, these higher rates will become the new normal, but we are not there yet. The bottom line is that a higher rate places a higher monthly payment on a buyer’s back, and with many people struggling to put food on the table at this time, it’s not an option.
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Regarding home prices, they’re still unaffordable to most. However, while trying to adjust to the economy and the market, sellers have been changing their asking prices, with price reductions becoming more common in an attempt to attract buyers. The median list price for homes posted a modest decline, down by 0.2% compared to this time last year. This marks the 41st straight week of home listing prices that are dropping on an annual basis, and this may reflect a trend toward a more balanced market.
In addition to this, housing inventory has been on the rise as houses are taking longer to sell. Homes stayed on the market before selling for an average of 41 days in January, the longest timeframe since before the pandemic occurred. Although this might not be ideal for sellers, more homes on the market have certainly increased options for buyers.
What this all boils down to is that the current housing market presents a blend of challenges alongside some progress.
Rental Real Estate Remains Stable and Lucrative
There’s volatility and instability in many economic arenas right now – from mortgage rates to the stock market. Even so, we’ve seen one area that’s held its ground through it all, and that’s the rental real estate sector.
During these times of high inflation, Wall Street tanks, a national debt that’s spinning out of control, and even a destructive pandemic, real estate investors have not only kept their heads above water, but they have thrived. Over the past few years, their rental property prices have risen substantially, providing them with equity gains and increased net worth. Along with this, rents have spiked, which has increased their cash flow and ROI.
Related Article: Pending Home Sales See Record Cancellation Rates as More People Turn to Rentals
If you’re seeing the big picture now and would like to invest in real estate so you won’t have to worry about these concerning economic factors that seem to be constant, feel free to schedule a complimentary call. We’re a full-service investment company that provides built-to-rent properties, and our team will even place a property manager and a tenant so you’ll be cash flowing from the start. We can help you get on the path to financial independence and stability; all you have to do is take the first step by reaching out.
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