Here’s how mortgage brokers are finding solutions for their clients with rate unpredictability continuing
Market volatility, caused in part by the Trump Administration’s on-again, off-again tariffs, caused mortgage rates to bounce up and down last week, and brokers are working to navigate that tumultuous landscape.
While rates had been forecasted to continue a steady decline, volatility in the market, including the 10-year Treasury, caused rates to surge late in the week.
Sarah DeFlorio (pictured top), vice president of mortgage lending at William Raveis Mortgage, said last week’s rate jumps caught some people off guard.
“Everybody is waiting for the time when we can see that consistent movement of rates down,” DeFlorio told Mortgage Professional America. “Unfortunately, that is not what we have seen over the course of the past week. That can be difficult, especially for a consumer who's reading about in the headlines that rates are down, when rates are moving around by as much as half a percent over the course of a week.
“It's definitely a little bit crazy, but that is exactly what we saw last week.”
The market started its volatility when President Trump announced his “Liberation Day” tariffs. Since then, some tariffs have been delayed by 90 days, while others remain in effect. Large tariffs were placed on items from China, which the administration modified over the weekend to exclude some electronics.
Facing auto tariffs and job uncertainty, Chris Sbonek of Mitten Mortgage Lending calls for brokers to get creative—leveraging lender programs and home equity to support clients through financial strain.https://t.co/nOb5PbsHTs
— Mortgage Professional America Magazine (@MPAMagazineUS) April 14, 2025
More at play than just the 10-year Treasury
The back-and-forth has caused the markets to largely drop, outside of a one-day rally last week. DeFlorio notes that the volatility also changes how experts view the market and its effects on interest rates.
“For so long, the easiest way to track mortgage rates has just been to keep an eye on what's going on with the 10-year Treasury,” DeFlorio said. “And when we saw the 10-year Treasury take a significant dip, we did not see rates come down as much as one might have expected.”
DeFlorio believes there are two reasons why interest rates did not follow that 10-year Treasury dip: “One was that it did not hold, so it was not consistent,” she said. “The other reason was that mortgage-backed securities (MBS) actually did not fare quite as well. And I think that's going to be a bigger line item in the ongoing conversation. When we see these major swings, we're not necessarily going to see rates behave as they have historically, at least not in such a locked-up fashion.”
The tariffs on China could directly impact the MBS market. As of December, China held $760 billion in US government debt, much of it MBS. If China decides to sell this debt, it could force interest rates higher.
“Every season has its flavor”
Despite the recent market volatility, the most recent forecasts were for gradual rate declines over the next two years. DeFlorio notes that this will allow brokers to use a couple of different tools in the mortgage process than they have in the past few years.
“They say that every season has its flavor,” DeFlorio said. “As we see these changes in the larger market, different loan products and features become more important.”
As the market exited the low-rate era of the pandemic, DeFlorio noted that customers were concerned about locking in rates and paying for extension of those rate locks.
DeFlorio notes that brokers will be able to use float downs to allow buyers to lock in a lower rate before closing if rates have dropped during the mortgage process.
“As rates are coming down, you sort of hedge against the future,” DeFlorio said. “You protect what you know in terms of where the rate is currently. But then, if things get better, you can take advantage of that.”
The other product she believes will become more popular in a dropping-rate environment is a rate modification. It will allow borrowers to lower their mortgage rate for a fee, usually less than completing a full refinance.
“Borrowers could go do a refinance down the road if they wanted to,” DeFlorio said. “But lenders aren’t necessarily going to want to lose all the mortgages that they have on their books. It will help bridge the gap between the time before we get to a really low-rate environment where someone would want to do a full refinance.”
During this volatile time, DeFlorio encourages brokers to focus more on making a deal that works for their client, and less on a specific interest rate.
“I have a lot of people who are happily locked in right now, especially after watching the volatility of the last week,” DeFlorio said. “Those rates are now significantly higher. I would say that what we’ve been doing is focusing on the monthly payment and what that looks like. If that’s manageable for the customer, and if it’s the property they want, then let’s run with that.”
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