After the news was announced last Friday night, bond yields rose, while mortgage rates roughly followed the trend of the 10-year Treasury Bond yield.
On Monday, the average rate on the popular 30-year fixed loan reportedly hit 7.04%, the highest level since April 11.
Matthew Graham, chief operating officer of Mortgage News Daily, said: "Ordinary mortgage lenders should consider not only the market changes at Friday's close, but also the additional weakness this morning. This has led to a considerable one-day increase in interest rates, but it has not changed the overall situation much."
The surge in mortgage rates in April had a direct impact on the housing market, sending it into a downturn during the usually busy peak spring sales season. According to real estate website Realtor.com, pending sales of existing homes fell 3.2% in April compared to April last year, in terms of contracts.
Homebuilders also noticed a sharp drop in demand in April. Homebuilder confidence is now at its lowest level since late 2023, according to the National Association of Home Builders' monthly index.
According to the American Mortgage Bankers Association's weekly index, mortgage demand among homebuyers picked up in the first two weeks of May, but interest rates were just around 6.9% at that time. Recently, whenever interest rates exceed the 7% threshold, homebuyer demand has slowed significantly. Furthermore, any increase in interest rates could disqualify some people from even getting a mortgage.
