📉 Mortgage Rates Are Caught in a Tug-of-War — Here’s Why

If you’re watching mortgage rates and wondering why they’ve stayed frustratingly high, the answer isn’t just “inflation” or “the Fed.” It’s a perfect storm of current events — both in the U.S. and globally — that are putting pressure on rates in real time.

Sticky Inflation & a Strong Jobs Market

Markets had hoped for multiple Fed rate cuts this year — but hotter-than-expected inflation and stubbornly strong job growth have kept those hopes in check. The latest jobs report came in strong again, which gives the Fed no urgency to cut. And if the inflation data coming out this week (CPI on Wednesday) shows prices aren’t cooling?

That will delay things even further.

Tariffs and Policy Uncertainty

Recent tariff announcements on Chinese imports — especially electric vehicles and key tech — are adding upward pressure on prices. That has Wall Street nervous that inflation could spike again in the second half of the year. Combine that with election-year policy unpredictability, and investors are staying cautious.

Treasury Yields React to Every Headline

The 10-Year Treasury yield — which drives mortgage rates — is bouncing around based on every piece of economic news. When inflation or jobs data surprises, yields spike. When markets expect the Fed to wait longer to cut, yields rise again. Right now, yields are holding in the mid-4% range, which is keeping 30-year mortgage rates stuck in the high 6% to low 7% territory.

The Fed Is Quiet — But the Market Is Not

We’re just days away from the next Fed meeting, and while a rate cut is off the table, what Powell says will matter. If he hints that cuts are coming in the fall, we could see rates ease slightly. If he doubles down on caution, the market could harden — and mortgage rates will reflect that tone.

What This Means for You

If you’re a prospective buyer: This is a rare window of leverage that is continuing throughout 2025. Inventory is growing, sellers are flexible, and rates could drop later this year — which means more competition later. Buying now and refinancing later could be your smartest move.

If you’re a homeowner: For most of you it is simply not the right time to refinance. But you should know and set your "strike rate." Don’t try to time the market perfectly. Just know your number, and we’ll track it for you.

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