Mortgage rates ease below 6.5% as ceasefire tempers oil and inflation fears

Mortgage rates have dipped below 6.5%, offering a narrow window of relief for homebuyers as the Middle East ceasefire tempers investor anxiety over oil and inflation. As of Monday, the average 30-year fixed rate stood at 6.43%, down 4 basis points from the previous week, according to Mortgage News Daily. HousingWire’s Mortgage Rates Center reported a similar decline, with conventional 30-year loans at 6.47% on Tuesday.

The drop follows a temporary ceasefire through April 22 that eased fears of oil supply disruptions. With reduced geopolitical risk, the 10-year Treasury yield fell, narrowing the spread between Treasury yields and mortgage rates. That spread has dropped from 2.11% to 2.05% in just one week. Had historical spreads from the past three years persisted, mortgage rates would now be between 6.88% and 7.45%, analysts note.

Federal Housing Administration (FHA) 30-year loan rates fell to 6.18%, down 3 basis points, benefiting borrowers with lower credit scores or smaller down payments. Jumbo loan rates, however, rose 4 basis points to 6.33%, reflecting stronger demand in high-cost markets.

Still, inflation remains sticky. The March Consumer Price Index showed annual inflation at 3.3%, and economists do not expect the Federal Reserve to cut rates in April. The CME Group’s FedWatch tool shows 99.5% of traders anticipate the federal funds rate will stay in its current 3.5%–3.75% range through 2026.

Despite slightly lower borrowing costs, consumer sentiment is at a record low. The University of Michigan’s April Consumer Sentiment Index came in at 47.6—down sharply from March and the weakest reading in the survey’s 70-year history. Mortgage applications, a leading indicator of home sales, are down 7% year over year, seasonally unadjusted.

Yet purchase demand is holding. Optimal Blue reported a 13% increase in rate-lock volume from February to March and a 26% rise annually, driven by purchase loans rather than refinances. Refinance share remained at 28%, higher than most of 2025, but higher rates have muted that activity.

"Purchase demand is carrying the market forward even as rates move higher," said Mike Vough, Optimal Blue’s senior vice president of corporate strategy.

The housing market remains in a wait-and-see stance. For-sale inventory growth has slowed from a 33% year-over-year peak last year to just 3.21% last week, with further contraction likely. "Until there is a clearer resolution to the international conflict and energy prices stabilize, both buyers and sellers will likely remain in ‘wait-and-see’ mode," said Lisa Sturtevant, chief economist for Bright MLS.

The reduction in mortgage spreads has prevented rates from climbing further—but without a long-term resolution, the reprieve may not last. For now, lower spreads have kept 30-year rates below 6.5%, sparing borrowers from even higher costs.