March is Regime Change Month For Rates

The most recent regime involved steady improvement starting in May 2025 and ending three weeks ago. A new regime has now taken hold, driven by a fundamentally different set of market forces.

Previous Market Regime Characteristics

• Stable economic data with labor market uncertainty
• Cooling inflation trajectory
• Fed expected to cut rates by September, then hold
• Foreign central banks likely to cut rates
• Treasury issuance relatively flat

New Market Regime (Triggered by Iran War)

• Inflation too high for Fed rate cuts
• Oil/energy price spikes worsening inflation expectations
• Labor market uncertainty insufficient to help rates
• Central banks now considering rate increases rather than cuts
• Increased Treasury issuance due to war funding and tariff refunds

Key Fed Commentary

Fed Chair Powell stated the Fed needed to see improvement in “core goods” and “non-housing services” inflation before considering cuts, describing recent progress as “disappointing” while not ruling out potential hikes.

Mortgage rates climbed above 6.5%, reaching their highest level since September 3, 2025, after previously hitting 5.99% three weeks prior.

Economic Data (Week of Mar 16–19)

Event	Actual	Forecast	Prior
Feb Industrial Production	0.2%	0.1%	0.7%
Feb Pending Home Sales	1.8%	-0.5%	-0.8%
Feb PPI m/m	0.7%	0.3%	0.5%
Feb Core PPI m/m	0.5%	0.3%	0.8%
Mar Philly Fed Business Index	18.1	10	16.3
Jobless Claims (Mar 14)	205K	215K	213K
Jan New Home Sales	0.587M	0.72M	0.745M

Mortgage Rate Snapshot (Mortgage News Daily)

Loan Type	Rate	Change
30-Year Fixed	6.49%	-0.04
15-Year Fixed	6.05%	-0.02
30-Year FHA	5.97%	-0.03
30-Year Jumbo	6.62%	-0.01
30-Year VA	5.99%	-0.02
7/6 SOFR ARM	6.25%	+0.06

MBA Rates

Loan Type	Rate	Change	Points
30-Year Fixed	6.30%	-0.58	0.63
15-Year Fixed	5.66%	-0.45	0.73
30-Year FHA	6.08%	-0.51	0.70
30-Year Jumbo	6.39%	-0.49	0.34

Freddie Mac Rates

Loan Type	Rate	Change	Points
30-Year Fixed	6.22%	+0.01	0.00
15-Year Fixed	5.54%	+0.07	0.00

MBS and Treasury Data

Instrument	Value	Change
UMBS 5.0	98.41	+0.26
UMBS 5.5	100.27	+0.19
10-Year Treasury	4.347%	-0.28
30-Year Treasury	4.928%	-0.21

Recent Housing Data

Indicator	Value	Change
Mortgage Applications	347.1	-10.91%
Builder Confidence	38	+5.56%
Existing Home Sales	4.09M	+1.74%
New Home Sales	587K	-21.21%
Pending Home Sales	70.9	-1.25%

Upcoming Economic Data (Mar 25 – Apr 1)

Event	Forecast
Feb Import Prices	0.5%
Feb Durable Goods	-1.4%
Jobless Claims (Mar 21)	210K
Mar Consumer Sentiment	53.8

Source: US Housing Market Weekly — Jay Bridges, Mortgage Lender, Priority Capital Corporation