Mortgage rates just got the best possible news they could get.
A 10-day ceasefire between Israel and Lebanon has been announced that also resulted in Iran declaring the Strait of Hormuz “completely open.”
This resulted in oil prices dropping into the $80s and 10-year bond yields falling closer to 4.20%.
As a result, 30-year fixed mortgage rates will also see a winning day, building on a winning month thus far in April.
Just be wary that conditions can change quickly, and the ceasefire only lasts 10 days.
Mortgage Rates Extend Winning Month on New Ceasefire
A new 10-day ceasefire has been agreed to between Israel and Lebanon, complementing the existing one between the U.S. and Iran.
At the same time, Iran announced that the Strait of Hormuz was open for business again, leading to a big drop in oil prices.
This pushed 10-year bond yields a lot lower, as easing oil prices equate to reduced inflation concerns.
That will translate to lower mortgage rates today as well, and builds upon the strong month we’ve seen already.
Much of the increase in rates in March has been erased, though mortgage rates are still roughly .25% higher than their absolute lows seen prior to the conflict.
Whether they keep falling is another question, but it’s certainly good news for home buyers and even those looking at a rate and term refinance.
I checked out mortgage rates from a variety of big banks this morning and they’re all pretty much back to the lows we saw in February, perhaps just a hair higher.
So if you were shopping mortgage rates and gave up because of how bad March was, you might want to revisit and call some lenders for new quotes.
Beware of a Bounce in Rates If the Deal Falls Apart
While there’s a ton of optimism regarding mortgage rates right now, beware of a bounce higher.
It’s really no different than when the stock market rallies and then all of a sudden has a pullback or a down day.
While it’s great news to hear that negotiations and ceasefires are in effect, more so for the people actually affected by this conflict, it can change at a moment’s notice.
For example, the original two-week ceasefire between the United States and Iran ends on April 22nd, which is next Wednesday.
And this new ceasefire between Israel and Lebanon only lasts for 10 days. The same goes for the Strait reopening.
It’s only open during the 10-day ceasefire. That’s not a ton of time to get ships moving again given the backlog, assuming it isn’t extended.
The U.S. is continuing its blockade until “our transaction with Iran is 100% complete,” per President Donald Trump.
Trump also said, “Iran, with the help of the U.S.A., has removed, or is removing, all sea mines!”
In addition, “Iran has agreed to never close the Strait of Hormuz again. It will no longer be used as a weapon against the World!”
So if you believe all that, and the various parties cooperate during the ceasefire, we could see mortgage rates continue to drift lower next week and beyond.
But if something unexpected happens, or we see any sort of setback, mortgage rates could shoot higher again.
Lastly, remember that rates always take longer to fall than they do to rise. It’s an elevator up and a staircase down.
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