Mortgage rate drops provide a bright spot amid tariff turmoil, but trade wars pose new dangers

• The 30-year mortgage rate has dropped to its lowest point since October amid the turmoil of the week’s trade war.

• This may not last long if tariffs revive inflation and push back interest rates.

• Tariffs could also weaken buyer sentiment and increase new home costs up to $9,200.

President Donald Trump Latest tariffs salvo caused chaos in the markethowever, there may be silver lining for home buyers: Loan costs fall.

The mortgage rate fell to its six-month low on Friday, bringing down one of the biggest barriers for U.S. home shoppers.

According to data from Daily Mortgage News30-year fixed interest rates fell from 6.75% to 6.55% between Wednesday and Friday, reaching its lowest level since October.

It’s tougher than Trump expected Customs Drive surrendered this week as investors urged Safe Haven Treasury bonds to seek evacuation. Mortgage fees closely track long-term bond yields. As it stands, the 10-year benchmark financial yields fell below 4% for the first time since Friday October.

Initially, this should seem like welcome news for buyers navigating the historically affordable housing market. Rising interest rates have prevented current homeowners from selling, cutting market inventory and increasing home prices. In 2025, this was translated into a Cooldown housingtransaction activity slows down to crawling.

It’s logical to expect a return to demand, but for some analysts, this could be a short-lived window. That’s when tariffs disrupt the supply chain Boosts inflationit encourages interest rates and, as a result, bond yields.

“Mortgage fees are currently falling, but as higher product costs start to boost inflation, there is a very high chance that prices will return. We hope to ride a roller coaster with mortgage rates over the next few months.”

This is because tariffs can raise inflation and keep interest rate expectations high, thus keeping bond yields high. Pushing and pull between inflation forecasts and growth fears could continue to pack bond yields into a narrow range and keep floors under mortgage rates.

The purchase application jumped to the highest level in nearly two months just above the tariff announcement, but analysts suggest that the trade war could exacerbate market headwinds.

According to the latest one, recent duties are expected to increase the average home cost by $9,200 National Association of Housing Builders. An estimated 7.3% of the products needed for home construction were imported into the United States in 2024.