Mortgage Rates Today, Apr. 14, 2025: Difficult Times for Rates. But Will They Last?

The bigger picture

Last Thursday afternoon, The Wall Street Journal observed: "Mortgage rates usually fall during periods of economic uncertainty. But
during the past tumultuous week for the markets, mortgage rates ended essentially flat and dealt another blow to the housing market’s crucial spring selling season." If only.

The Journal was relying on Freddie Mac's weekly figures when it asserted that mortgage rates were "essentially flat." And, as we explained on Friday, Freddie's numbers were way out that week.

Mortgage News Daily's archive shows the average rate for a 30-year fixed-rate mortgage at closing last Friday afternoon was 7.07%. The previous Friday, it had closed at 6.60%. So, not flat — essentially or otherwise.

But the Journal was right about one thing. Mortgage rates almost always do fall during periods of economic uncertainty. We say that so often here that we worry the repetition will bore regular readers. So, what's different now?

Mortgage rates and capital flight

Economist Dr. Noah Smith explained in his Substack blog a widely shared hypothesis, namely "capital flight." And he believes that the recent tariff upheavals are the main driver for that phenomenon.

U.S. stock indices recovered somewhat on Friday, but they're still down significantly over the last month. That's not so out of the ordinary or troubling. It happens sometimes.

But what is out of the ordinary and troubling is that bond yields are up, and the dollar is down compared to other leading currencies. "Now, it’s helpful to understand that U.S. bond yields going up while the dollar goes down is actually a highly unusual and scary situation," writes Smith.

"Usually, Treasury yields and the dollar move together, because usually, when investors look at U.S. government bonds, they don’t ask 'How risky is this bond?' — instead, they only ask 'How much money will this bond pay me?'" he continues. "When yields rise (because of Fed policy or economic conditions), investors buy more Treasuries in order to get those higher returns, and this buying drives up the dollar. When yields fall, investors sell, and the dollar goes down. So, yields and the dollar move in the same direction."

This has clearly changed. But why's it scary? Because it suggests global and domestic investors are losing faith in the American economy and the assets on which it is built. So, they're taking their money elsewhere. Hence the term "capital flight."

On Sunday, The Wall Street Journal said about last week, " ... what really stood out was the combination of moves, the flight from
American assets in general. Stocks, bonds and the dollar all sold off at once." That appeared under the chilling headline, "Will the Last Investor to Leave America Please Turn Out the Lights."

In his Apr. 7 letter to shareholders, JPMorganChase CEO Jamie Dimon explained some of why investors are spooked. "The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession," he wrote. "And even with the
recent decline in market values, prices remain relatively high. These significant and somewhat unprecedented forces cause us to remain very cautious."

Unfunded tax cuts

What else might be worrying investors? Well, the tax law working its way through Congress provides for huge tax cuts without corresponding savings in government spending.

AKA the "one big, beautiful bill," this is due to reach the negotiation (between the House and Senate) phase this week. The Journal expects this to be "one big, ugly negotiation" as deficit hawks and loyalists duke it out.

"On April 10, 2025, the House adopted the Senate’s amended version of the budget resolution, which allows $5.3 trillion in deficit-financed tax cuts (the combination of $3.8 trillion of tax cuts assumed to be “costless” under a current policy baseline plus $1.5 trillion in additional deficits permitted), deficit increases of $521 billion on defense and immigration spending, a minimum of $4 billion in spending cuts, and an increase in the debt limit of up to $5 trillion," says the Tax Foundation.

Adding up to $5 trillion to the nation's credit card risks maxing it out. In other words, the investors who have so far been willing to finance U.S. government debt are beginning to wonder whether governments will always be able to keep up with payments, especially as higher yields (interest rates) can quickly add to costs.

This is something new and concerning. Last Thursday, Fortune ran the headline, "Treasuries have been a safe investment for decades, but that may be changing: ‘Other countries have a much better balance sheet’"

Don't panic — yet

Tariffs and unfunded tax cuts have delivered a double whammy to America's credit. And that largely explains why mortgage rates, which tend to track yields on 10-year U.S. Treasury bills, have been rising at a time they'd normally be falling.

But we're a long way from a knockout punch. America is still the most prosperous country on earth. And it's come back repeatedly from similarly scary challenges. What happens next is in our leaders' hands.

Coming up

Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates — as we've seen frequently recently, especially over tariffs.

Mortgage rates today

According to the MarketWatch economic calendar, no economic reports are on today's agenda. Given that markets have largely been shrugging off such reports amid their obsession with tariffs, that's business as usual.

Later this week

Tomorrow brings the March import price index (IPI). That's typically the least important of all inflation reports, so it would likely need to reveal some truly shocking data for investors to take notice of it.

The week's star economic report is March's retail sales, due Wednesday. Other days are relatively dull.