US mortgage rates have fallen to their lowest point since October, fueled by a rally in government bonds amid escalating trade war tensions, Bloomberg reports.
This drop in rates has triggered a significant surge in home purchase applications, reaching a more than one-year high, according to data released by the Mortgage Bankers Association (MBA) on Wednesday.
The contract rate on a 30-year mortgage decreased by 9 basis points to 6.61% for the week ending April 4. Rates on 30-year jumbo mortgages and 15-year fixed mortgages also experienced declines.
The lower borrowing costs have also ignited a refinancing boom, with an index measuring refinancing applications surging by 35% to its highest level since October. The gauge of mortgage applications for home purchases advanced more than 9%, marking the sixth consecutive week of growth.
The decrease in mortgage rates is closely tied to the movement of 10-year Treasury note yields, which dipped below 4% last week for the first time since before the election. This decline was largely driven by President Donald Trump’s recent tariff announcement, which sparked fears of a potential recession and triggered a sell-off in the stock market.
While the robust home purchase activity may alleviate concerns about a rapid decline in consumer demand, economists remain cautious, citing the potential for economic activity to slow significantly. They warn that tariffs could lead to increased inflation and hinder investment, ultimately impacting overall economic growth.
The MBA survey, conducted weekly since 1990, gathers data from mortgage bankers, commercial banks, and thrifts, covering more than 75% of all retail residential mortgage applications in the United States. The latest findings highlight the sensitivity of the housing market to broader economic and political uncertainties, particularly trade policy.
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