Let’s be real—all the tools we once used to measure the economy and mortgage rates are useless now. 🛠️🚫. Economists predicted mortgage rates would hit 6.62% in Q1 ending March 31; it was close. March closed out rates at 6.74%. Mortgage Rates spiked in April, reaching a high of 7.09%. 📈 Unless something drastically changes, economists will need to revise their mortgage rate projections again. Since April, the trends have stayed closer in the 6.85% to 6.99% range with an occasional spike up to 7.8%. 👿

❓ Why are The Feds and Wall Street on Edge? 

👉 First, understand how tariffs can affect the 10-year Treasury bond and Mortgage-backed Securities by checking out “Why Mortgage Rates and the Bond Market Are at Risk: Trade War Fallout“ for important details. 

💠Secondly, domestic confidence is shaky, sinking to its lowest level since May 2020. Personal income is down, and spending was up, go figure. Regarding inflation, March’s and April’s numbers were excellent news,  🎉 But it no longer matters because the Fed 🏦 now needs to measure the economy with a new stick. 📏Buckle up! . 🎢

📌 WHY?

Because the old rules no longer apply. Tariffs have rewritten the script, and the economy is now measured against a new backdrop. Whether you think tariffs are good or bad, this isn’t political — it’s about the numbers and how they impact your mortgage rate and monthly payment. 📈 I spent the weekend doing a deep dive 🤿 into what’s behind the bond market chaos and why it’s sending rates higher. We’re now dealing with new economic measurements — inflation pressure, hedge fund shakeups, and global investor doubt. 😬

💥 MBS in the Crosshairs: Securities at Risk

The mortgage market’s foundation is shaking, and investors are watching closely.
Trump’s push to privatize Fannie Mae and Freddie Mac has directly put Mortgage-Backed Securities (MBS) in the crosshairs. 😬

📉 These securities have long been seen as safe, 🛟 government-backed investments. That backing gives buyers confidence and keeps mortgage rates stable. But if that safety net disappears,🧨Investors could pull their money, demand higher returns, and send mortgage rates through the roof.

📌 We’ve seen this before. 

When Mortgage-backed Securities were private, rates averaged 8.08% in 2000. The average mortgage rate was 6.57% in 2002. From 2003 to 2005, the average was 5.90% and rose to the mid-6 % range from 2006 to 2008. It’s funny, 😂 I was working on the article and Bank Rate decided to post their average 30-year Mortgage Rates, great timing! ⏳

 Keep in mind the “crash of 08”, investors were burned badly 🔥 when they realized the mortgages they purchased were junk loans, and the market tanked.📉 That’s why a bipartisan Congress passed the Dodd-Frank Bill and created the FHFA as an independent Federal Agency. Since the 2008 crisis, both Fannie and Freddie have been in a conservatorship, meaning the FHFA has kept tight control over them to protect the mortgage market. There would be several legal and financial hurdles that the White House would need to jump through to privatize Freddie and Fannie. For now, it’s causing huge disruption on the bond market ~ Again! 

 💥 The Treasury’s Dirty Little Secret is OUT!

For decades, the U.S. Treasury quietly relied on foreign nations to bankroll our debt, with China and Japan footing the bill  But that cozy setup is falling apart thanks to escalating trade wars and ballooning deficits  Whether you love or hate President Trump, his aggressive tactics pulled back the curtain and exposed just how fragile our financial system is  The result  The bond market is on edge, with fewer willing buyers and a government scrambling to stay afloat. ⚠️💣

💠Furthermore, as the Fed pulls back and global buyers disappear, the question becomes: Who will buy all our debt  bonds) GDP contracted, and now tariffs are part of our economy; I’m afraid to see what May’s report will reveal. This is scary stuff. Maybe the government needs to rethink how it buys and sells government bonds.