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WTF Happened to Rates This Week?!
Definition of WTF:
Wild Trading Frenzy, Worldwide Tariff Fears, What The F!
Wild Trading Frenzy:
To say this week was wild is an understatement. Mortgage rates surged by 0.5% since last Friday, climbing back above 7%. The good news? They're still lower than the January peak of 7.26%.
But here’s where it got crazy:
On Wednesday alone, Wall Street traded over $5.5 trillion... in one day. The S&P spiked $3 trillion on what turned out to be fake news, then promptly crashed $2.5 trillion. It looked like someone took a defibrillator to the stock chart.
Historically, when the stock market tanks, mortgage rates fall. Why? Investors typically shift money from risky stocks into safer assets like U.S. Treasuries, driving rates down.
Not this time.
Instead, rates went up thanks to algorithmic computer trading and volatility that threw the rulebook out the window.
Worldwide Tariff Fears:
Meanwhile, tariff headlines made a comeback. Even though President Trump announced a temporary pause on some tariffs, global fears are flaring up again. The ongoing trade tension with China is a big wildcard, and it’s no longer just about TikTok.
This has turned into a high-stakes game of chicken. And the markets are feeling it.
Inflation Was the Silver Lining:
This week’s CPI and PPI inflation reports were very positive:
• Headline CPI dropped from 2.8% to 2.4%
• Core CPI fell from 3.1% to 2.8%
That’s solid progress! Normally, this kind of news would trigger a bond rally and bring mortgage rates down. But this week, inflation took a back seat as tariff fears stole the spotlight.
What’s Next?
Many of these tariff issues will get ironed out in the next 90 days, restoring some normalcy. When that happens, fundamentals like inflation and jobs will return to center stage, and they’re showing strength for lower mortgage rates.
But here’s the catch:
Uncertainty causes inaction.
If tariffs drag on, we could see job losses, hiring freezes, and consumers pulling back on spending. Financial stress is already showing. Record levels of minimum credit card payments and 90-day delinquencies are flashing warning signs.
So… why would anyone buy a home now if we’re heading into a recession?
Here’s the historical truth:
In the past 50 years, we’ve had seven recessions. Home values increased in six out of seven. The exception was 2008, when loans were handed out like candy. Those days are long gone.
Why do home values rise in recessions?
Because the Fed cuts rates to stimulate the economy. Lower rates = more affordability = rising home values.
Yes, recessions come with fear and rising unemployment, but right now, over 95% of the workforce is still employed. Buyers who can push past the fear have real opportunity.
This is that opportunity market.
Rates are considered high, but buyers who lean in now can find motivated sellers, price flexibility, and seller-paid rate buydowns that lower their monthly payments.
This is the time to get in, get creative, and build wealth while others wait on the sidelines. As I always say, Be the buffalo and run into the storm before the storm washes over you!
And one more thing… real estate is long term. Every decade since the 1940’s has seen positive appreciation. Real estate is a long term winner!
The information contained is the viewpoint of the presenter(s). Individuals should consult their own financial representative.
Estimated Mortgage Payment is for exemplary purposes only. Contact a licensed loan officer for exact numbers and APR. Additional rates and terms may apply and are subject to change without notice. Loan scenario assumes a purchase price of Zillow's list price and a 10% down payment. Points and fees not included. Property tax, homeowners insurance, mortgage insurance, and HOA fees are approximate and may vary. Other fees may apply. Product displayed is a conventional 30-year fixed rate mortgage using the current average rate as shown on Mortgage News Daily (mortgagenewsdaily.com).
Estimated Qualifying Income assumes a homebuyer has a FICO score above 740, no other credit debt, and a debt-to-income (DTI) ratio of 43%.
For exact numbers and APR or to run a loan scenario based on your own credit and income, contact our office at (858) 259-8700.
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