Mortgage and refinance interest rates today, March 31, 2026: Lower, as bonds gain favor

30-year fixed mortgage rates eased to 6.36% (down 11 bps) and 15-year fixed to 5.81% (down 9 bps) on Zillow's latest national averages; bond yields fell amid a month-long equity downturn. Refinance rates remain higher (30-year refi 6.43%), and VA/ARM products show comparable spreads. Example borrower impact: a $400,000 30-year at 6.36% yields roughly $2,492/month and ~$496,960 total interest versus a 15-year at 5.81% with ~$3,335/month and ~$200,211 total interest. Forecasters: MBA sees 30-year near ~6.3% through 2026 and 6.2–6.3% in 2027, while Fannie Mae anticipates sub-6% by end-2026 and ~5.6–5.7% in 2027.

Analysis

The small decline in mortgage rates is a marginal liquidity shock for housing rather than a regime change; it re-prices affordability at the margin and re-accelerates activity where buyers were rate-sensitive (first-time and move-up buyers) but won’t unlock large-scale refi waves unless rates move another 50-100bp. That means demand-side beneficiaries (homebuilders, title/closing services) see volume gains with a 1–3 month lag as listings and contract signings filter through, while supply-side participants (MBS holders, mortgage REITs) face immediate convexity and prepayment dynamics that can erode carry.

Banks and deposit-funded lenders live in the middle: narrower mortgage spreads can boost origination volume but compress NIMs on a 3–9 month horizon, especially for regional banks whose funding is more rate-sensitive. Secondary effects include a move toward shorter-duration mortgage products (ARMs) if fixed rates don’t fall further, which shifts credit and duration risk back to consumers and originators and reduces long-duration MBS demand.

Key tail risks: a sustained equity sell-off or a fresh inflation surprise could reverse the modest yield decline within days, sending mortgage spreads wider and stalling housing activity; alternatively, a meaningful deceleration in payrolls or services inflation could knock 30y rates lower by 50–75bp over 2–4 months, triggering a classic refi season and rapid prepayment shocks. The consensus steady-rate narrative through 2026 understates the asymmetry: small further rate drops produce outsized volume upside for builders and originators, while small rises inflict outsized mark-to-market pain on levered MBS and REITs.

Key Decisions for Investors

• Long ITB (iShares U.S. Home Construction ETF), 3–9 month horizon. Position size 2–4% portfolio. Rationale: modest rate easing should lift buyer traffic and cancellations-to-contract conversion; target +18–25% if purchase activity normalizes, stop -10% if 10y > +25bp from entry (signals demand rollback).
• Short NLY (Annaly Capital Management) via buying 3–6 month puts or a small outright short. Rationale: limited rate easing raises prepayment risk and compresses spread income for mortgage REITs; risk/reward ~2:1 (expect 15–25% downside vs max pain if rates plunge and prepayments surge—use 25–40% hedge allocation to cap tail risk).
• Long MBB (iShares MBS ETF) tactically for 1–3 months, sized small and hedged. Rationale: if Treasury yields fall further, high-quality MBS can rally; hedge negative convexity by pairing with a small short in NLY (or buying REIT puts) to protect against rapid prepayment-induced drawdowns. Target capital gain 3–6% with carry, stop -3% hard limit.
• Pair trade: Long ITB / Short KRE (SPDR S&P Regional Banking ETF), 3–6 months. Rationale: homebuilder revenues benefit from incremental affordability while regional banks suffer NIM compression and potential credit stress in purchase pipelines; aim for asymmetric payoff (target net +15% while risking net -8%, rebalance if 10y moves >30bp).