Mortgage Rates Surge to 7-Month Highs

Happy Friday from Local Mortgage.

Another rough week for mortgage rates as we surged to a 7-month high. We are up another 0.25% in rate now at 6.125% for our best 30-year fixed conventional scenario.

Markets tried to rally early in the week after President Trump suggested that the conflict in Iran might be over soon. But as the week continued, rates moved higher alongside rising oil prices, causing inflation concerns with investors.

Another critical concern amongst investors is the increasing supply of debt being issued as the supply of bonds increase - not just by the U.S. government, but across the entire bond market. At present, government issuance is high and only expected to get higher. Even though congressional approval is ultimately required, armed conflict can increase expectations for future military spending. There's also uncertainty over tariff refunds which would further increase the supply of U.S. Treasuries to offset the lost revenue.

As far as economic reports this week, the two main inflation reports didn’t help. While the CPI Index matched expectations for February, the PCE Index, which is the FED’s preferred inflation indicator, showed an increase from 3.0% to 3.1%, which was the highest reading since March 2024.

Looking ahead, attention will remain fixed on the conflict with Iran. It will be a light week for economic news with just the release of the Producer Price Index on Wednesday.

Hope everyone has a great weekend, thank you for reading.