In case you haven’t heard it, the customs charged against China is now 145%. Yes, you read it right.
Not the 125% you may have heard of yesterday because mathematics apparently omitted an additional 20% increase. Oops!
They are now well above the previous 104% tariff rate and the 84% originally in place.
When you start looking at the event sequence, it becomes clear that it is all just absurd.
What is the next? 200% duty? And to which end? What is the goal here and how does this actually get us lower priority rates?!
Trump said he brought back 3% mortgage rates
During his September campaign, President Trump now said he would bring back the ultra-low mortgage rates, we got to know and love.
Specifically, he said that “Reduction of mortgage rates is a big factor.” We will get them back to, we think 3%, maybe even lower than that. “
That was not clear, but when he first chose Scott Bessent as a treasury secretary, the strategy was to lower the 10-year bond yield.
If you didn’t know, the 10-year-old yield really correlates well with 30-year-old mortgage rates because they both have a decade long shelf life.
Most homeowners only store their home loans for about 10 years because they sell, refinancing, prepayment, etc.
Either way, if you are able to get 10-year-old yields down, you can also get the mortgage down.
This seemed to work in the first months of 2025, but hit a disadvantage in the last week when Liberation Day tariffs were underway.
The 10-year dividend rose yesterday when bondsal sale took place
Yesterday, the 10-year-old yield went Haywire as the clock hit midnight on the east coast.
There was a massive sale of bonds and the yield increased over 4.50% from less than 4% only days earlier.
All the land we had put together in recent months were immediately erased, which led to a huge increase in the mortgage rates.
The 30-year-old fasting, which was about 6.5% or lower, climbed over 7%, terribly inappropriate timing with spring home buying season now.
It also undermined refinancing the rate and expression, which showed signs of life again in March when the rates finally eased and the recent buyers were able to hang payment savings.
Now we are back on a well -known territory where potential home buyers see rates starting with a “7” again.
The problem is that inventory has also risen and house prices were already under pressure in many markets, as were affordable prices.
This could mean even more inventory, including all the new lists that hit the market in the last month when the housing market conditions seemed to be favorable.
Now it is scary to be a seller or a buyer where the former probably thinks twice on listing, and the latter is uncertain whether they can afford or that. Or if they get a job in a year.
Long history short, this level of uncertainty is bad for mortgage rates, home buyers and home sellers. And must be corrected soon before we risk bigger problems.
Goldilocks -Told may be just right
So how do we actually get lower priority rates without blowing up the economy?
First of all, we need some clarity about the situation. We cannot continue to obtain customs rates for infinity.
Nor can we continue to kick the can down the road and delay customs, then reintroduce them and then rinse and repeat.
Apart from alienating our trading partners, we are not taken seriously anymore. And people can’t make big decisions, such as buying a house.
If the administration really believes in the tariffs, find out an intermediate plot. I noticed when this first started that the tariffs were bad for mortgage rates.
They can increase the cost of goods, including home building supplies, leading to inflation and higher interest rates.
But that was when there was a blanket on even our closest allies, including Canada and Mexico.
It is possible to target some specific tariffs on some trading partners without causing a direct trade war that achieves a little more than exacerbating friends.
Finding a middle ground allows us to return to the financial data available, such as jobs, CPI, inflation and other important drivers of mortgage rates.
Showing a sense of stability also means that abroad will continue to invest in our bonds and thereby increase their price and bring yields (interest rates).
There is a point where you take it too far and it burns back as we saw when 10-year-old bond gives out over 4.50% yesterday.
They have since reassured but remain over 4.35%, which means the 30-year-old is still priced still about 7%or maybe just below.
We have to get the trade war behind us
If we can reach some offers here and get the trade war behind us, the economy will again affect mortgage rates.
And if the data shows that inflation continues to moderate, yields and mortgage rates can come down as they were in September and October.
I was considering a few weeks ago how mortgage rates would be who had Kamala Harris won.
There would probably not have been a trade war or the threat of new tariffs, so only the financial data would matter.
And recently, it’s been pretty good for mortgage rates.
They don’t have to (and probably not) fall back to 3% anytime soon. A speed somewhere in the low-6s or tall 5s is seeming sufficient these days for most.
It will give the recent home buyers who were stuck with 7%+ mortgage rates to apply for an interest rate and term refinancing.
At the same time, it will give potential home buyers the green light to move forward with a purchase thanks to a reasonable rate and more peace of mind by knowing that there is some stability in the economy.
In short, until there is greater security, you can expect continued pressure upwards on the mortgage rates.
Before creating this site, I worked as a banking director of a wholesale loan in Los Angeles. My practical experience in the early 2000s inspired me to start writing about mortgage loans 19 years ago to help potential (and existing) home buyers better navigate the home loan process. Follow me on x for hot take.
