Tariffs equals lower mortgage rates or higher rates?

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Tariffs equals lower mortgage rates or higher rates?

The average rate on the popular 30-year fixed mortgage surged 13 basis points Friday to 7.1%, according to Mortgage News Daily. That’s the highest rate since mid-February.

Mortgage rates have been on a roller coaster ride all week, as bond yields spiked higher mid-week when President Donald Trump’s new tariffs on dozens of countries went into effect. Yields dropped when Trump lowered the tariff rate on most countries hours later. Tariffs on Chinese imports, however, currently stand at 145%.

Tariffs equals lower mortgage rates or higher rates?

Mortgage Rates Ford Realty Inc

Mortgage rates for April 8, 2025, are around 6.50%.
Rates dropped last week following Trump’s announcement of new tariffs. But they’ve inched back up in recent days.
If tariffs lead to higher inflation, mortgage rates could rise further.

Mortgage rates dropped last week in response to President Donald Trump’s “Liberation Day” tariffs announcement. But they’re back up today.

The sweeping new levies led to a sell-off in the stock market and pushed the 10-year Treasury yield below 4% for the first time in six months as traders moved to safer investments. Mortgage rates, which typically track the 10-year Treasury yield, also fell.

But this yield ticked back up above 4% this week even as stocks continued sliding. So it’s unclear if mortgage rates will fall further in response to tariffs.

It’s also possible that rates will rise further at some point. Tariffs are expected to push inflation higher, which may lead to higher mortgage rates.

In a speech in Arlington, Virginia last week, Federal Reserve Chair Jerome Powell said that the central bank will continue to wait and see what the impact of tariffs will be before deciding whether to raise or lower the federal funds rate.

“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected,” Powell said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”

If the Fed doesn’t end up cutting rates this year, mortgage rates may rise.