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Trump's Tariffs Drive Mortgage Rates to Six-Month Low, Spurring Lender Competition

The U.S. housing market sees temporary relief with falling rates and rising inventory, but inflation risks and affordability challenges persist.

Ryan Vasko and his wife are shown outside the home they just bought after moving from Oregon Thursday, April 3, 2025, in Littleton, Colo. (AP Photo/David Zalubowski)
Zillow Home Loans mortgage signage is displayed in downtown Phoenix, Arizona, on June 5, 2024.
Ryan Vasko and his wife are shown outside the home they just bought after moving from Oregon, April 3, 2025, in Littleton, Colo. (AP Photo/David Zalubowski)
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Overview

  • Mortgage rates have dropped to 6.55%, their lowest level since October 2024, following President Trump's tariff announcement, which pushed investors toward safe-haven Treasury bonds.
  • Lenders are expected to launch a competitive price war in response to falling swap rates, with some institutions already cutting mortgage rates by up to 0.21 percentage points.
  • Increased housing inventory and slower price growth are giving buyers more negotiating power, though affordability remains a significant challenge for many Americans.
  • Economists warn that the tariffs could eventually fuel inflation, potentially reversing the current decline in mortgage rates and increasing long-term borrowing costs.
  • Despite the temporary boost in purchasing power due to lower rates, housing costs remain near record highs, keeping many potential buyers on the sidelines.