A Look Into the Markets
“Well, It’s Safe to Dance, It’s a Safety Dance” — The Safety Dance, by Men Without Hats
This past week, interest rates touched the lowest levels of the year. Let’s break down what happened, what it means, and how to think about your mortgage strategy heading into spring.
📉 Bonds Love Uncertainty
With global tensions flaring and tariff rumors swirling, investors did what they always do when they get nervous: they poured money into bonds. This move, known as a “safe haven trade,” is like a financial fire drill—people head for the exits and into assets that feel, well… safe.
🧠 What’s a “Safe Haven Trade”?
It’s when markets get spooked (think: geopolitical tension, volatility, or recession risk), and investors dump riskier stuff like stocks for safer bets like U.S. Treasuries. That stampede pushes bond prices up, which makes yields (aka rates) go down. So when stocks fall and investors panic, mortgage rates often benefit.
And boy, did they.
In fact, March saw the rare double dip: stocks down and rates down—the first time that’s happened in five years.
💸 A Billion a Day: The Fed Pauses QT
Another major player behind falling rates? The Fed. Last week, Chair Jerome Powell announced the Fed would pause Quantitative Tightening (QT) as of April 1.
🔍 Wait, What’s QT Again?
Quantitative Tightening is when the Fed sells off bonds to reduce money in the system. Think of it like turning down the faucet. But by pausing QT, the Fed is saying:
“Let’s stop selling and just hold onto what we’ve got.”
That keeps demand high, props up bond prices, and puts downward pressure on rates. It’s like the Fed gave the market a calming cup of tea—and it worked.
👷♂️ Jobs Report = Still Strong
The ADP payroll report for March (a measure of private-sector job growth) beat expectations. Normally, that’d be bad for mortgage rates because it signals a strong economy (and possibly inflation). But in this case, the Fed’s QT pause and the safety trade created so much buying pressure in bonds that rates barely flinched.
🏡 30-Year Mortgage Rates
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6.64% as of April 3, 2025
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Down slightly from 6.65% the previous week
Not a massive move, but when you’re talking about hundreds of thousands of dollars in loan balance, even a 0.01% dip can make a difference.
🔐 4.20% Falls—A Technical Breakthrough
The 10-Year Treasury Note—which is the main influencer of mortgage rates—finally broke below 4.20%, a level that’s acted like a concrete floor for nearly six months.
For two consecutive days, it closed beneath that threshold, something we haven’t seen since early October. That opens the door for 4.20% to become a ceiling, not a floor—giving rates more room to fall (or at least less room to climb).
💬 Bottom Line
Between global uncertainty and the Fed backing off QT, bonds had a strong week—and mortgage rates responded in kind. If those themes persist, we could see even lower rates ahead.
🔭 Looking Ahead: Inflation on Deck
The next big headline? The Consumer Price Index (CPI) drops next week.
This is the inflation report the Fed watches like a hawk. If inflation cools off, bonds may rally again and push rates lower. If it heats up, that could put a temporary floor under rates.
🔒 Rate Lock Strategy: What Should You Do Right Now?
Here’s how we’re advising clients this week:
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If you’re closing in the next 15–30 days:
Lock now. The market gave you a gift with these rate drops. Don’t risk losing it while waiting on the CPI report. -
If you’re 30–60 days out:
Consider a float-down lock option. That lets you lock in today’s rate, but still benefit if rates improve further before closing. -
If you’re house hunting:
Don’t get rate-FOMO. Stay pre-approved, know your budget, and be ready to strike. With programs like Lock & Shop, you can even lock before finding a property. -
Bonus tip: Buyers using Cash to Keys or other creative financing programs will benefit from lower rates and increased leverage to win offers.
Want to talk strategy or see what this means for your specific situation? Let’s connect—this market rewards being proactive, not reactive.
Mortgage Market Guide Candlestick Chart
For homebuyers and refinancers, mortgage rates are a critical metric, and they’re closely tied to mortgage bond prices. The chart below shows a one-year view of the Fannie Mae 30-year 5.5% coupon. The rule is simple: rising bond prices mean falling mortgage rates; falling prices mean rising rates. Recently, prices pulled back from resistance at $100 as the 10-year Treasury yield climbed above 4.20%.
Chart: Fannie Mae 30-Year 5.5% Coupon (Friday, April 4, 2025)
Economic Calendar for the Week of Week of April 7 – 11
