That scaling-back of expectations for rate cuts will come as a familiar frustration for mortgage professionals and borrowers. In 2024, up to six moves by the Fed to bring rates lower were expected at the beginning of the year – but those expectations withered as the central bank trimmed rates just three times between September and December before tapping the brakes in January of this year.
Don’t rule out another jump in mortgage rates despite an immediate dip
Mortgage rates ticked slightly lower as Treasury yields dipped in the wake of the Fed’s announcement yesterday, although that slide could be reversed swiftly. “Bonds are doing better today, but the jobless claims [on May 8] could come out saying that there are fewer than expected, and rates could go right back up,” Cohn said.
“I think we’re basically down to data- and tariff-watching again. And Powell made it very clear: one of his comments, talking about a rate cut, was that it’s not a situation where they can be pre-emptive because they actually don’t know what the right responses to the data will be until they see more data.”
Trump continues to tout the possibility of striking multiple trade deals while commerce secretary Howard Lutnick has said an agreement with at least one country is conditionally in place. But over a month since the president rolled out his tariff wave in the White House’s Rose Garden, progress has been slow – and it remains to be seen what lies in store for the mortgage market as a result.
“When Trump brought [the tariffs] out and then put on the 90-day waiver, I think he expected to have deals much faster, and it’s taking a lot longer in order to try to negotiate,” Cohn said. “I don’t know if that’s good for us or bad for us.”