Housing is getting a modest reprieve from higher borrowing costs, and buyers are responding. US mortgage applications for home purchases rose 10.1 percent last week, the biggest increase since early January, while the average 30-year mortgage rate slipped to 6.35 percent, its lowest since mid-March. Refinancing also picked up, but the more interesting read-through is that demand is proving resilient even after years of punishing rates, which had left many homeowners effectively locked in.
That stability in mortgage costs is tied to falling Treasury yields, and those yields have eased as investors grow more confident that the US and Iran could be moving toward a ceasefire. The housing data also fits with other signs of firmer demand: the National Association of Realtors said contract signings for existing homes rose in March. For lenders and homebuilders, that is a welcome nudge, but it is still only a nudge, with rates far above the pandemic-era lows that fueled the last housing boom.
Europe is seeing the opposite problem. Germany’s government cut its 2026 growth forecast to 0.5 percent from 1.0 percent, blaming the Iran war for higher energy prices, supply disruptions and weaker export prospects. Inflation is now expected to rebound toward 3 percent this year and next, which is already pushing markets to price in more European Central Bank rate hikes. That leaves Chancellor Friedrich Merz’s promised recovery facing a harsher test, especially as business groups say private investment is still too weak to offset the drag.
The trade front is no calmer. Canadian Prime Minister Mark Carney says Ottawa will not let Washington dictate terms in US-Canada negotiations, while US Trade Representative Jamieson Greer says the two sides remain fundamentally misaligned. With the USMCA review due by July 1, the fight is over more than dairy quotas and liquor shelves: the outcome could shape North American market access for years, or keep the bloc in prolonged review mode until the pact expires in 2036.
