What happened to interest rates in the past couple of weeks?

They’ve gone sky-high.

My name’s Evan Kaufman, your VA originator, here to help explain some of this.

A couple of weeks ago, we saw interest rates on mortgages spike. In fact, if you look at the 10-year Treasury yield—a major indicator for the direction that interest rates head—it spiked with the fastest and most furious increase in a 37-year period. Pretty incredible.

At first, I thought, “Wow, that was a long time ago.”
And then I realized—oh my gosh—that was almost during my lifetime too! Some of you watching were alive back then, but still… it’s been a long time.

So in 37 years, we had not seen such a fast spike and increase in rates as we did just a couple of weeks ago.

What Happened?

I’m going to walk through a little bit of the economic background as to how this can occur.

Over the last couple of months, we saw rates at a high. Early in the year—January—we saw rates peaking, hitting a level similar to a couple of years ago when everything was spiking and just going nuts. But then they drifted down slowly.

And then, after the election, everyone was like, “Okay, hey, we might see things get better.”

The Role of Tariffs

Oh—tariffs. I actually have a good video on what tariffs are and how they can impact rates.

Historically, increased tariffs would bring rates down, because ultimately, increased tariffs would increase people’s demand for Treasury bonds and yields. That demand for bonds typically drives mortgage rates down as well.

But the whole theory—that increased tariffs would drive people to a safer investment like the 10-year Treasury yield from the U.S. government—is predicated on people believing that the 10-year Treasury is the standard safe asset.

The issue over the past couple of weeks is that the tariffs have been inconsistent—turned on, turned off, kept on but with exceptions given to certain countries or groups. That inconsistency has shaken investors’ trust in what they should consider a “safe” investment.

Investor Uncertainty

All of a sudden, people are questioning: “Hey, is the 10-year Treasury yield actually safe or not?”

And here’s the problem for us in the mortgage world:
Whether or not you believe it’s safe, the 10-year Treasury yield heavily drives mortgage interest rates.

Right now, we’re in a world where the Treasury yield might appear to be similar to where it was about a month ago—not at the high, not at the low, somewhere in between—but mortgage rates are higher than they were. Why?

Because there’s uncertainty in the market.

Where Could Rates Go?

Could we see mortgage rates calm down over the coming months? Possibly.

The scenario where I see that happening is if we slow down the tariff changes, stop adding or removing tariffs, and just let the market settle. If things steady and folks get more comfortable with where things are at, we could see rates naturally settle down a bit.

Right now, even though Treasury yields are similar to a month ago, mortgage rates are higher because people are uncertain. Investors are demanding a higher return for their capital, which pushes mortgage interest rates up.

Alternatively, we could see a world where investors continue questioning the 10-year Treasury as a safe investment. If that happens, we could see higher rates for longer—a phrase that’s been thrown around a lot lately.

Why It Matters

If investors change their mindset and no longer see the 10-year Treasury as the standard safe investment—as it’s been for decades—then we’re in a whole new world of volatility.

That’s why we’ve seen such radical changes in rates.

So if you’ve been home shopping recently, you may have gone from:
“Okay, not a bad rate,”
to “Hey, that’s actually a pretty good rate,”
to “Oh my gosh, what just happened to my interest rate?”

That’s because everything right now is getting whacked around by the tariff situation and other macroeconomic factors.

Final Thoughts

Keep an eye out over the coming weeks—not just for what happens with tariffs, but with general economic news.

Typically, bad economic news might bring mortgage rates down over time. But that’s not guaranteed if inflation remains high. In that case, the Federal Reserve steps in, trying to fight inflation, which can also keep rates elevated.

Boy, that was a lot of economic background to digest!
I studied this stuff—it was my degree. I love economics in a weird way. So thank you for bearing with me through all of that.

But seriously, I just wanted to comment on the wild roller coaster ride we’ve had with interest rates the past couple of weeks. Hopefully, that helped demystify what’s going on.

Just know: there are some of us out here who absolutely love understanding how this works and are happy to help explain and talk it through.

Feel free to reach out to me.

My name is Evan Kaufman.
Thanks again for listening.
Take care.