Mortgage rates sink on Trump tariffs, but other costs may deter buyers
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Mortgage rates plunged on Thursday following President Trump's tariff announcement.
Why it matters: It's a silver lining for homebuyers as the sweeping tariffs announcement otherwise portends a dire state for the global economy.
By the numbers: The average 30-year fixed rate fell to 6.55% from 6.75% on Wednesday, according to Mortgage News Daily. In January, the rate was as high as 7.26%.
What's happening: Mortgages rates are falling along with their benchmark, the 10-year U.S. Treasury, where yields are being driven down this week by spooked investors seeking the relative safety of the Treasury market.
The big picture: When mortgage rates decline, homebuyers have more purchasing power.
- But today, the broader state of the economy — as well as the impact of tariffs on construction costs — could make it difficult for would-be buyers to capitalize on lower mortgage rates.
- "Falling rates would juice the housing market, but the general economic uncertainty will hold it back," Joel Berner, senior economist at Realtor.com, tells Axios.
State of play: Builders see tariffs raising the cost to construct a new home by $9,200 on average, with higher prices for materials and home appliances potentially being passed onto consumers.
- A median-priced new home ($459,826) is already out of reach for nearly 75% of U.S. households, according to a new analysis by the National Association of Home Builders.
- Meanwhile, existing-home prices continue to climb, reaching a median of $398,400 in February, per National Association of Realtors (NAR) data.
Reality check: People who can afford the plunge might take it.
- "Even in an economic recession, generally home sales can rise if the mortgage rate declines," NAR chief economist Lawrence Yun told Politico.
The bottom line: The good news is lower mortgage rates mean you might finally be able to buy a house.
- The bad news is you might be wary of a making a major purchase — for a set of different reasons.
