Mortgage Rates Level Off, But Is 6.5% The New Normal?

Mortgage rates have soared in the past month, but market participants appeared to take a wait-and-see approach this week as they contemplate further price increases for home loans.

On Monday, Mortgage News Daily reported that 30-year fixed rates averaged 6.43%, down 4 basis points in the past week. MND rates are based on best-execution pricing from lender rate sheets.

HousingWire’s Mortgage Rates Center on Tuesday showed that rates for 30-year conforming loans averaged 6.52%, up 7 bps from one week ago. That figure is also up 38 bps after bottoming out at 6.14% in early March.

Rates for 30-year loans through the Federal Housing Administration (FHA) were up 4 bps during the week to 6.21%, while 30-year jumbo loan rates added 7 bps to average 6.29%. HousingWire Data analyzes locked loan rates across all borrower credit profiles.

The market faces the potential of further interest rate volatility due to the ongoing war in Iran, with President Donald Trump imposing a Tuesday deadline of 8 p.m. ET for Iran to reopen the Strait of Hormuz or face further consequences.

Dimon sounds a warning

A key U.S. banking leader weighed in this week on the larger topic of geopolitics and the prospect of greater economic turmoil as the conflicts in Iran and Ukraine wear on.

In a letter to shareholders, JPMorganChase CEO Jamie Dimon wrote that “war is the realm of uncertainty,” anticipating that the impacts will stretch far beyond those directly involved.

“Nations that are heavily dependent upon imported energy are already seeing the effects. And it’s not just energy, it’s commodity products that are byproducts of oil and gas, like fertilizer and helium.”

Rising oil prices stemming from shortages could filter further into the global economy. A Bloomberg survey of economists, released in advance of Friday’s Consumer Price Index (CPI) data for March, found that inflation is expected to rise 1%, the largest gain for a single month since 2022. Core inflation, which excludes food and energy prices, is expected to rise 0.3% on a monthly basis.

Rising risk has also spurred feedback from monetary policymakers like Beth Hammack, president of the Federal Reserve Bank of Cleveland.

Hammack, who is a voting member of the Federal Open Market Committee (FOMC) in 2026, told The Associated Press this week that she will press for no changes to benchmark interest rates “for quite some time” — and also cautioned that an increase in the federal funds rate is not out of the question.

The Fed has not raised rates since July 2023, when a 25-bps hike brought the target range to 5.25% to 5.5%. A total of six cuts since then has reduced rates by 175 bps.

“I can foresee scenarios where we would need to reduce rates … if the labor market deteriorates significantly,” Hammack said. “Or I could see where we might need to raise rates if inflation stays persistently above our target.”

Positive news arrived last week in the form of a surprising jobs report, with U.S. employers adding 178,000 jobs in March. HousingWire Lead Analyst Logan Mohtashami believes that “the Fed will be totally fine with the jobs data as long as jobless claims and the unemployment rate are low. Which means they won’t be cutting rates aggressively anytime soon.”

Status check for housing

This week’s HousingWire Housing Market Tracker showed that buyer and seller activity is subdued in response to higher rates. Weekly pending home sales and new listings were down on a yearly basis, while purchase mortgage application growth declined from 5% to 1% year over year.

According to Lisa Sturtevant, chief economist for Bright MLS, “the spring housing market is in a holding pattern right now” due to rate uncertainty. Consumers who were seriously considering a home purchase if rates fell below 6% are particularly impacted, she said.

“The volatility in rates will keep more prospective home sellers in their homes, particularly those with a sub-3% mortgage rate. And buyers are having to do new math to see how much they can afford with rates now close to 6.5%,” Sturtevant said.

Ryan O’Malley, head of portfolio management at Ducenta Squared Asset Management, shared a rosier outlook in prepared remarks.

“Mortgage rates have eased about 15 basis points over the past two weeks, largely reflecting a pullback in rate volatility as geopolitical risks begin to stabilize,” he said.

“We’re also seeing mortgage spreads tighten, a sign that investors are getting more comfortable stepping back into the space. For borrowers, that’s translating into slightly lower financing costs, but the bigger story is that markets are starting to price in less upside risk to inflation and rates from here.”

In his letter to Chase shareholders, Dimon touched on proposed changes to capital requirements that, if enacted, could spur more bank activity in mortgages and potentially lower rates through additional competition.

Dimon said Chase had “mixed” reactions to the revised proposals for Basel III and the Global Systemically Important Banks (GSIB). He added that “excessive rules” for mortgage originators, servicers and secondary market participants have deterred banks through increased costs.

“Mortgage regulatory reform alone would make the mortgage business far safer and generate an additional 500,000 mortgages a year,” he wrote. “Local zoning requirements often limit affordable housing and make it much more expensive. In addition, there are many examples of excellent public/private affordable housing programs, which only need to be replicated.”