Bond yields rose after the announcement last Friday night, while mortgage rates roughly followed the 10-year Treasury Bond yield.
On Monday, the average interest rate on the popular 30-year fixed loan was reported to have reached 7.04%, the highest level since April 11.
Matthew Graham, chief operating officer of Mortgage News Daily, said: "The average mortgage lender has to consider not only the market movements at Friday's close, but also the additional weakness that occurred this morning. This has led to a considerable one-day increase in interest rates, but it has not changed the overall situation much."
The surge in mortgage rates in April had an immediate impact on the housing market, sending it into a slump during the usually busy spring sales season. On a contract basis, the number of existing homes for sale fell 3.2% in April compared with last April, according to real estate website Realtor.com.
Homebuilders also noted a sharp drop in demand in April. The homebuilder confidence index is now at its lowest level since late 2023, according to the monthly index from the National Association of Home Builders.
Mortgage demand from homebuyers picked up in the first two weeks of May, but rates were just around 6.9% at the time, according to the Mortgage Bankers Association's weekly index. Recently, whenever interest rates exceed the 7% threshold, demand for homebuyers has slowed significantly. Furthermore, any increase in interest rates could disqualify some people from even obtaining a mortgage.
