REAL ESTATE

Rates for home loans dropped slightly, but may not go much lower as uncertainty from Washington shrouds the housing market.

In the week ending April 3, 30-year fixed-rate mortgages averaged 6.64%, Freddie Mac announced Thursday. That’s down fractionally from 6.65% last week and 6.67% the week before.

Those figures don’t include fees or points, and rates in some parts of the country may be higher or lower than the national average.

Mortgage rates have bounced within a narrow range since the start of the year even as U.S. bond yields have tumbled. The 30-year fixed-rate mortgage has long moved alongside the 10-year Treasury note, since fixed-income investors see the two as roughly similar.

As a reminder, yields (rates) move in the opposite direction from prices. If investors are selling fixed-income products, prices go lower and yields higher. But if there’s more demand, prices go higher and yields fall.

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Here’s another way to think of the relationship between yields and prices: if a financial product is seen as riskier, the issuer must pay more – a higher rate – to attract an investor.

Anxiety about Washington policy has led investors to sell riskier assets, like stocks, and buy those seen as less risky, like bonds. The S&P 500 is down about 7% since the start of the year, while the 10-year has lost more than 50 basis points – a good chunk of that in the first few days of April, as investors digested the new tariff policies from the White House.

But most housing insiders don’t expect mortgage rates to fall as far.

“While the 10-year yield may continue to edge lower, mortgage rates are unlikely to fall as quickly, or as much, because the market is navigating a lot of uncertainty,” said Dan Richards, president of Seattle-based Flyhomes Mortgage, naming tariffs as a key source of that uncertainty.

“Despite expectations of rate cuts later this year, the Fed’s stance remains cautious, even restrictive,” Richards said in an email. “That tension between falling yields and lingering risks means mortgage rates may take a more hesitant path downward.”

It’s a cruel irony that mortgage rates are most likely to hit a bottom when the economy is weak enough that many people won’t want to, or won’t be able to, buy homes.

While recessions often bring economic uncertainty, they can also shift the dynamics of affordability, notes Dale Baker, president of Home Lending at KeyBank. Lower interest rates could improve buying power for well-qualified borrowers, potentially opening doors that were previously out of reach. At the same time, Baker noted, tighter credit conditions and job market instability may widen the gap between those ready to buy and those pushed to the sidelines.