What happened to mortgage rates this week?
The Freddie Mac 30-year fixed mortgage rate fell 5 basis points to 6.47% this week following a ceasefire agreement in Iran and a framework to reopen the Strait of Hormuz. The previous weeks have been filled with constant back-and-forths, showing progress toward a resolution, only to be followed by heightened military action. However, the latest rounds have proven more promising than previous periods of reprieve, as a tentative deal has now been drafted and signed by President Donald Trump.
The newly seated Fed Chairman Kevin Warsh joined a unanimous 12-0 vote this week to hold the federal funds rate unchanged in a range of 3.50% to 3.75%, where it has stood since December. However, the hold was the least surprising part of the meeting. Warsh used his first decision as chair to signal a broader regime change: The easing bias is gone, forward guidance has been shelved, and the committee’s statement was rewritten around a single, unhedged commitment to delivering price stability. Markets responded with a jump in the 10-year Treasury and rising odds of a rate hike before the year’s end. The logic of Warsh’s approach, earning credibility by following through rather than telegraphing, is sound and ultimately the path to lower long-term rates. But a market without clear guidance may demand a premium in the near term, which could keep mortgage rates from falling as quickly as the Iran ceasefire alone might suggest.
What does this mean for the housing market?
For buyers, the spring market has shown more resilience than the rate environment might suggest. Contract signings climbed 3.8% in May as sellers adjusted prices to attract demand and buyers responded. Listing prices have now fallen year over year for seven consecutive months, and inventory remains above last year’s levels. A lasting resolution to the conflict would help bring mortgage rates down, boost consumer confidence, and inject housing market momentum heading into summer. However, the path will likely be rocky.
