May 9, 2025

Trade Deal with U.K. Nudges Rates Higher

Mortgage rates ticked back up today, returning to the higher levels we saw earlier in the week. The move came after the announcement of a new trade agreement between the U.S. and the U.K.—a headline that had ripple effects across financial markets.

At the start of the day, most lenders were quoting rates similar to yesterday's, but that changed as bond markets weakened. Since mortgage rates are closely tied to bonds (specifically mortgage-backed securities), that shift forced lenders to make upward adjustments.

So, what’s behind the bond market’s reaction? Some analysts point to a simple explanation: trade deals tend to be seen as good for stocks and not-so-great for bonds, since they suggest stronger economic growth. And when the economy looks strong, inflation concerns tend to rise—something bond investors don’t love.

But it’s not just about optimism. There are deeper, more technical concerns at play here too, like how trade policy affects inflation, foreign investment in U.S. debt, and the volume of new bonds the government needs to issue. Those topics are a bit wonky for a quick blog post—but the takeaway is this: mortgage rates are juggling a lot of factors right now, and trade developments are adding to the pressure.

That said, today’s increase isn’t anything to panic over. It’s a modest move by historical standards, and rates remain lower than they were at the start of April—even if they’re a bit higher than what we saw through most of March.

If you're house hunting or thinking about refinancing, it's still a great time to explore your options. Just know the rate environment may remain a bit bumpy as markets sort through all this global news.