Mortgage rates took a noticeable dip the day after President Donald Trump announced sweeping new tariffs, prompting concerns about a global trade war. But the question on everyone’s mind is whether that downward trend will last or if it’s just the calm before the storm.
Mortgage Rates Hit Five-Month Low
On Thursday, the average 30-year fixed-rate mortgage fell to 6.63%, according to Mortgage News Daily. That’s a 0.12% drop from the day before, marking the lowest level in over five months. Freddie Mac also reported a slight decline, with the national average edging down to 6.64% from 6.65% the previous week.
Freddie Mac described the dip as part of a general pattern of stability in mortgage rates, saying the 30-year rate has shown only minor movements in recent weeks. This steadiness, they noted, has encouraged increased demand for home purchase applications.
Tariffs Could Undermine Rate Relief
However, the long-term outlook remains murky. A new 10% tax on nearly all imports into the U.S. could have broader economic consequences. Realtor.com cautioned that if the tariffs stoke inflation as many economists expect they could force the Federal Reserve to rethink its current trajectory. That could lead to fewer rate cuts or even policy tightening, which would likely keep mortgage rates elevated.
Realtor.com’s analysis noted that mortgage rates have remained above 6.6% since last October largely because inflation has been running hotter than anticipated. If tariffs push the economy toward recession, rates might come down. But if inflation remains stubborn, buyers could be looking at higher borrowing costs for longer.
A Sudden Drop Spurs Buyer Activity
Some homebuyers may already be seeing the effects. Jeremy Holmgren, state mortgage manager at Zions Bank, noted that anyone who locked in a mortgage on Wednesday before Trump’s tariff announcement could be paying up to 25 basis points more than those who waited a day. He called the immediate dip a “knee-jerk reaction” but said rates are likely to continue sliding in the near term.
Holmgren explained that economic uncertainty typically benefits mortgage rates.
“What’s bad for the broader economy and the stock market often ends up being good news for mortgage rates.”
Lower Rates Could Fuel a Hotter Market
While falling rates may seem like a win for buyers, they could also intensify competition in the housing market. Holmgren pointed out that lower borrowing costs often embolden both buyers and sellers. When rates are attractive, more people feel confident about entering the market either to buy or to list their homes which can lead to rising home prices.
He also warned that holding out in hopes of even lower rates could be a risky strategy.
“Sure, rates might keep dropping. But if home prices go up in the meantime, buyers could end up spending more overall.”
Refinancing Could Pick Up
Refinancing may also see a boost if rates continue to fall. Holmgren noted that homeowners typically start to refinance when rates are at least a full percentage point lower than their existing mortgage. With rates approaching that threshold, some borrowers may find themselves in a good position to take advantage.
The Bottom Line
Trump’s new tariffs have introduced fresh uncertainty into an already unpredictable mortgage market. While rates are dipping in the short term, the long-term effects will depend on how inflation, the economy, and Federal Reserve policy all play out in the months ahead.
With rates shifting and the market heating up, timing is everything. At Brazoban Realty, our experienced agents and mortgage partners are here to help you make smart, strategic decisions whether you’re buying your first home, looking to refinance, or exploring investment opportunities.
Don’t wait and wonder. Let’s talk today. Contact us at BRAZOBAN.com to schedule a no-pressure consultation and explore your options while rates are still favorable.
Credit: Article from Deseret News.
