Weekly Mortgage Market Update: Mortgage Rates Dip Slightly Amid Weak Economic Data and Tariff Tensions

What Happened in Mortgage Markets This Past Week?

This past week, the mortgage and bond markets absorbed a slew of economic reports, Federal Reserve commentary, and geopolitical developments, all while operating on a shortened schedule due to the Memorial Day holiday. Though headline movements were subtle, underlying data pointed to a more complicated picture for interest rates and mortgage activity heading into June.

Mortgage Rates in Raleigh NC Drift Lower

While national 30-year fixed mortgage rates held around 6.90%, slightly higher than April’s 6.71%, localized rates in North Carolina floated in the 6.78% to 6.98% range. Despite headlines suggesting rates increased, the bond market performance tells a different story: most mortgage lenders priced slightly lower than last week due to Tuesday’s bond rally, which many lenders hadn’t fully accounted for before the holiday weekend.

Refinance activity also responded, with average 30-year refinance rates easing to 7.19%, down from 7.32% the week prior. Purchase applications showed modest improvement, while refi applications declined—consistent with the week’s nuanced rate movements.

Key Economic Data Sends Mixed Signals

Tuesday delivered a full slate of reports that stirred market sentiment:

• Durable Goods Orders fell sharply by -6.3%, suggesting a pullback in business investment.

• Core Capital Expenditures, a proxy for business spending, dropped -1.3%, reinforcing recessionary concerns.

• On the housing front, Case-Shiller’s 20-city index showed a year-over-year gain of 4.1% in March, though the monthly increase was just 1.1%.

• The FHFA Home Price Index showed a -0.1% monthly decline, hinting at possible price stabilization—or early signs of softness—in some markets.

Meanwhile, Consumer Confidence surprised to the upside, jumping to 98.0 from a previous reading of 86.0, suggesting that consumer sentiment may be stabilizing even amid economic uncertainty.

Thursday’s GDP revision was eye-opening: Q1 GDP was revised to -0.2%, down from a previously reported 2.4%, largely due to a -2.9% drop in final sales. Coupled with a 3.6% decline in corporate profits, the data painted a bleaker-than-expected picture of economic momentum.

Inflation Trends and the Fed’s Next Move

Friday’s Core PCE, the Fed’s preferred inflation gauge, came in at 0.1% month-over-month and 2.5% year-over-year—steady, but not enough to trigger immediate policy action. Real spending increased by just 0.2%, while Chicago PMI slipped to 40.5, indicating a contraction in manufacturing.

Fed officials, including Kashkari, Barkin, and Goolsbee, offered varied perspectives throughout the week, but the common theme was caution. The FOMC minutes, released Wednesday, echoed a “wait-and-see” posture on future rate adjustments, pending inflation and labor market clarity.

Tariff Drama Rattles Markets

In addition to economic data, the bond market reacted to new tensions on the trade front. Former President Trump accused China of violating a 90-day tariff truce, and China’s suspension of critical mineral exports escalated fears of renewed trade barriers. This followed earlier proposals from the Trump campaign to introduce new tariffs on Canadian and Mexican goods.

Bond yields initially spiked in response but reversed as traders priced in the potential inflationary drag from tariffs and reduced risk appetite. Importantly, the National Association of Home Builders warned that tariffs could raise the cost of a new home by $10,900, putting additional upward pressure on housing inflation.

What It Means for Raleigh Homebuyers and Borrowers

For prospective buyers and homeowners in Raleigh, NC, this week’s developments suggest mortgage rates could remain volatile but slightly favorable in the short term. With inflation cooling and economic growth faltering, the Fed has reason to keep rates steady—or even consider cuts later this year.

However, ongoing trade disputes and potential tariffs could reverse some of the disinflation progress. Buyers may want to lock in rates during dips and stay engaged with the Raleigh Mortgage Team of Certified Home Loans to navigate market turns.

What Economic Data Will Influence Mortgage Rates Next Week?

Next week brings more high-impact data, including PMI reports and the all-important jobs report. Both are critical in shaping the Fed’s outlook and could significantly influence mortgage rates. Until then, the current environment presents a narrow window of opportunity for those ready to act.

📞 Need personalized advice on mortgage options in Raleigh? Contact Certified Home Loans today to explore your best rate opportunities.