Mortgage rates nudge higher as markets stay jittery

Mortgage rates rose again in the first full week following the Federal Open Market Committee's decision not to reduce rates during its January meeting.

Following the meeting, Pres. Trump nominated Kevin Warsh, a former Fed governor, to replace Jerome Powell as chairman. Warsh is seen by the markets as someone who is more accommodating to the President's desire to lower short-term rates.

The 30-year fixed-rate mortgage rose one basis point from the prior week to 6.11% on Feb. 5, the Freddie Mac Primary Mortgage Market Survey found. The rate is still 78 basis points lower now than for the same week last year.

At the same time, the 15-year FRM also gained one basis point to 5.5% from 5.49% on Jan. 29. For this week in 2024, the 15-year loan averaged 6.05%.

"The combination of improving affordability and availability of homes to purchase is a positive sign for buyers and sellers heading into the spring home sales season," said Sam Khater, Freddie Mac chief economist in a press release.

For the first three trading days in February, the 10-year Treasury yield, one of the benchmarks used in pricing the 30-year FRM, closed at 4.275% on Monday and Wednesday and at 4.274% on Tuesday. This compared with 4.227% on Jan. 29.

As of 11 a.m. on Thursday morning, the 10-year was 6 basis points lower, to 4.214%, a likely benefit of the collapse in stock prices, with the Dow Jones Industrial average down over 600 points, the Nasdaq off 396 points and the S&P 500 lower by 89 points. Yahoo Finance attributed the change to sell-off in the tech sector.

"After some mid-January volatility, the 30-year fixed mortgage rate settled back near its 2025 lows," said Kara Ng, senior economist at Zillow Home Loans in a Wednesday evening statement. "Even typical market movers, such as a Federal Reserve policy meeting, did not significantly shift rates."

However, two other rate trackers from product and pricing engines noted a significant rise in rates over the past seven days.

Lender Price data on the National Mortgage News website at 11 a.m. Thursday had the 30-year FRM at 6.34%, which while 1 basis point lower on the day, was 35 basis points higher than seven days prior at that time.

On Jan. 28, the day the Fed decision was announced, Optimal Blue had the conforming 30-year at 6.064%. A week later, it was at 6.114%, its highest level since Jan. 8.

After the announcement, market expectations for no change in short-term rates at upcoming meetings increased, Ng said, as the 10-year Treasury yield remained little changed in the aftermath, she said

"Zillow forecasts mortgage rates will continue a gradual descent toward 6% by the end of 2026, assuming current economic conditions hold," Ng wrote. "Policy shocks could sway that forecast."

Homebuyer sentiment on rates

Meanwhile, 94% of 2026 homebuyers will change their plans if mortgage rates don't get under 6% this year, a Clever Real Estate survey said.

Approximately two-thirds of this year's buyers expect to receive a rate under 6% when applying for a mortgage, with 64% stating they would only accept one below that level.

Almost six-in-10 said the mortgage rate matters more than the home price when making their purchase decision.

"The most underrated factor is bond market sentiment," said John Donikian, branch manager at Best Interest Financial, a mortgage company affiliated with Clever Real Estate, in the report. "How investors feel about growth and inflation expectations matters more than what the Fed says at a press conference."

Donikian does not expect mortgage rates to collapse, but to move within a range, with the volatility tied to economic data.

"Unless the economy clearly breaks or inflation decisively rolls over, rates are more likely to hover in the low-to-mid 6% range rather than fall meaningfully below it," said Donikian. Even as Freddie Mac's Khater trumpeted that rates remain near three year lows, Redfin pointed out they are still double where they bottomed out at during the pandemic and median sales prices are 1.2% higher versus this time in 2025.

"January was pretty busy on the selling side, largely because homeowners have finally come to terms with slower demand and lower sale prices than we were seeing during the pandemic buying boom," Redfin agent Monica DiSchiano said in a press release. "House hunters who had disappeared are trickling back — but they're picky and they want perfection if they're shelling out for a 6%-plus mortgage rate."

The next event that could have impacted mortgage rate movements, the Bureau of Labor Statistics report which would have been issued on Friday, is being delayed because of the partial government shutdown. But an ADP report released on Wednesday found the economy created 22,000 jobs last month, far below expectations.

This makes it favorable to a Fed rate cut taking place earlier than previously forecast, said Melissa Cohn, regional vice president of William Raveis Mortgage, in a statement.