In a dramatic shift that could breathe life into the spring homebuying season, mortgage rates fell sharply this week, dropping 12 basis points to an average of 6.63% on the 30-year fixed loan, the lowest level since October 2024. This news comes in the wake of the Trump administration’s newly announced tariffs, which have sparked market volatility and raised fresh fears of a potential recession.
📉 What’s Causing Mortgage Rates to Fall?
Mortgage rates tend to follow the yield on the 10-year U.S. Treasury, which dropped significantly this week as investors pulled their capital out of equities and into safer government bonds.
- 10-year Treasury Yield: Currently sits at 4.05%, a sharp drop from recent months.
- Spread (difference between mortgage rate and 10-year yield): 258 basis points (or 2.58%), well above the historic average of 170–180 basis points.
A widening spread like this often signals market stress, increased risk in mortgage-backed securities, or reduced investor appetite. Conversely, a narrowing spread indicates stability or strong investor demand.
So while yields have fallen, the elevated spread is keeping mortgage rates higher than they otherwise might be.
🏠 What This Means for Buyers and Sellers in Los Angeles
Los Angeles homebuyers, especially those shopping in high-cost Westside neighborhoods like Brentwood, Pacific Palisades, Beverly Hills, and Santa Monica, should see this rate dip as a key opportunity.
Even a small drop in mortgage rates can significantly impact monthly payments, which is especially important in a luxury market where loan amounts often exceed $1 million. Lower borrowing costs mean increased purchasing power, or the ability to lock in a better rate on a more desirable home.
For sellers, this could be the catalyst that finally encourages hesitant buyers to act. Homes that have been sitting on the market due to affordability concerns may see renewed interest.
💼 What This Means for Refinancers
This dip isn’t just for buyers. Homeowners who missed previous opportunities to refinance now have a chance to explore new options. With rates falling from the 7%+ highs of late 2023, now is a great time to speak with a lender, especially if you’re carrying a mortgage with a rate over 7%.
🔮 What Happens Next?
Mortgage rate volatility is expected to continue in the coming weeks. That’s because conflicting economic forces are tugging rates in opposite directions:
- Downward Pressure:
- Slower economic growth
- Rising recession risk
- Stock market volatility
- Weak consumer spending and confidence
- Upward Pressure:
- Sticky inflation
- The Federal Reserve’s potential reluctance to cut rates
- Global supply chain disruptions from tariffs
For now, however, the trend is clearly downward, and that’s good news for homebuyers trying to make their move before summer.
📢 Our Take
We tell our clients this all the time: The best time to buy or refinance isn’t when rates are low—it’s when they’re falling. And right now, they are. Even if we don’t return to the sub-5% era, buyers can leverage this drop to secure better monthly payments or negotiate more favorable purchase terms.
If you’re shopping in the Los Angeles luxury or mid-tier market and have been waiting on the sidelines, this is your window. Let’s strategize and make it happen.
📞 Contact Abdo Pierre Faissal for unparalleled real estate service.
📧 [email protected] | 📲 310-620-1038
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