Mortgage rates are unlikely to decrease anytime soon due to a sharp sell-off in government bonds. The 10-year Treasury bond yield has surged about 9% since its lowest point in April, reaching around 4.4% as of Thursday afternoon. This jump is the sharpest one-day increase since March 2020 and has kept 30-year fixed mortgage rates near 7%.
The key benchmark for mortgage rates is the 10-year Treasury bond yield. When it rises, mortgage rates usually follow. With yields moving in the opposite direction of bond prices, investors are pulling back from buying Treasuries, causing prices to fall and yields to increase.
According to Chester Spatt, professor of finance at Carnegie Mellon University’s Tepper School of Business, mortgage rates could fluctuate between 6.5% and 7% due to the elevated volatility in financial markets caused by tariffs and fears of a recession. This aligns with a forecast published by Zillow, which expects rates to end the year near the “mid-6% range”.
Last week’s stock market turmoil briefly sent investors into government-backed U.S. bonds, causing yields to drop. However, this effect was short-lived, as investors began dumping bonds again after Trump announced a 90-day pause on tariffs for most countries. The 10-year Treasury bond yield remains high, and mortgage rates are also stuck in a similar range.
Realtor.com chief economist Danielle Hale attributes the rise in yields to inflation concerns, uncertainty around trade policy, and questions about the Fed’s next moves. Despite the easing of tariffs, market caution continues to drive the bond market, keeping mortgage rates elevated.
Source: https://www.cnbc.com/2025/04/10/why-mortgage-rates-arent-falling-despite-tariff-pause.html