Mortgage rates fell this week as investors continue to gauge the path forward for the market. Investors’ shifting expectations for inflation vaulted bond yields to multi-month highs in late February and pushed up mortgage rates about half a percentage point in a month – a remarkable increase.

While this upward pressure remains in place, demand for U.S. Treasuries improved this week as some investors weighed the validity of these concerns about inflation. Mortgage rates followed suit, falling sharply in the first couple days in March. But despite this week’s decrease, the outlook for mortgage rates appears to have shifted from even just a few weeks ago. While the frenzy of late February is now behind us, the upward pressure on mortgage rates is likely to remain as the economy shows more signs of improvement and the vaccine rollout continues to exceed expectations.

That said, the pace of this upward momentum is far from certain – negative pandemic-related developments or surprisingly weak February jobs numbers are two factors that could keep mortgage rates in check or even nudge them back downward.