No Cut, Now What?
Mortgage rates recap and week ahead
Let’s break down last week’s mortgage rate trends, this week’s key economic data, and the housing market outlook with actionable rate lock guidance.
The FOMC Rate Decision and Bond Market Reactions
Last week, the Federal Reserve’s FOMC meeting concluded with the benchmark rate unchanged at 4.25 - 4.50%, as expected.
The 10-year Treasury yield opened the week around 4.21%. Heightened uncertainty from tariff policies and inflation risks, as noted by Fed Chair Powell, pushed yields higher throughout the week closing on Friday at 4.37%.
Above is a 5-day chart of the 10-Year Treasury Bond, which is considered the "risk free" rate and acts as a barometer for how mortgage bonds trade.
It is important to remember, in the USA, mortgage rates do not rise or fall. Instead, the cost of each rate changes based on the daily fluctuation in the price of mortgage bonds.
The price of mortgage rates also edged up, as the price of mortgage bonds fell (above). Mortgage rates are tied to the bond market, but bond prices and the cost of mortgage rates are inverse - lower bond prices mean more expensive mortgage rates and vice versa.
The Week Ahead
This week’s key release is the April Consumer Price Index (CPI).
This highly influential inflation report will be published on Tuesday, and the expected rate of change includes:
+ 0.3% month-over-month
+ 2.3% year-over-year
+ 0.2% month-over-month (core CPI)
+ 2.8% year-over-year (core CPI)
The main difference between core CPI and regular (or headline) CPI is that core CPI excludes volatile items like food and energy, while regular CPI includes all items in the consumer price index.
This exclusion is important because food and energy prices can fluctuate significantly due to seasonal or external factors, making them less representative of underlying inflation trends.
Core CPI is also a key indicator for central banks in making decisions about monetary policy.
If inflation comes in “hot” compared to market these expectations, then bonds will sell off leading to more expensive mortgage rates.
In addition to CPI, here are other factors and events to watch this week:
Retail sales on Thursday are projected to rise 0.7% month-over-month, reflecting consumer front-loading amid tariff concerns.
Consumer confidence data, also due Thursday, may show weakening sentiment due to trade policy uncertainty.
Fed Chair Powell’s speech on Thursday will be parsed for hints on rate policy amid tariff-driven inflation risks.
Recent U.S. / U.K. trade headlines highlight a deal lowering automobile tariffs, fueling cautious optimism for broader trade negotiations.
Big Picture Outlook
MORTGAGE RATES:
Tariff policies, combined with strong economic data (177,000 jobs added in April), sticky inflation (PCE at 2.3%), and Fed policy uncertainty are causing volatility in the bond market.
The year’s best pricing for mortgage rates was April 2nd, and although bonds have since recovered some of the abrupt sell-off from the week that followed, the overall trend hasn’t been very bond bullish which is reflected in the rate lock recommendations below.
HOUSING MARKET:
Existing home sales remain at a 30-year low (3.84M annualized rate in September), but single-family starts rose 2.7%.
Affordability constraints due to more expensive mortgage rates continue to persist, with sales forecast at 4.18M in 2025, with hopes of a subtle improvement to 4.89M by 2026.
🔑 Rate Lock Recommendations
SHOULD YOU LOCK OR FLOAT?
15 Days: ✅ Lock now — this week it is best to hedge against potential rate spikes from CPI or Powell’s speech. Meanwhile the unpredictable nature of trade negotiations will be an ongoing theme.
30 Days: ⚠️ Leaning lock — Float cautiously; cooler CPI data could ease rates slightly, but tariff news or negative surprises in economic data can just as easily add to the recent selling pressure in bonds.
60 Days: 🕒 Float cautiously — closely monitor tariff negotiations, Fed policy discussions, and any influential economic data; potential shifts could present opportunities for more favorable rates.
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