A recent wave of tariffs on imported goods has led to an increase in borrowing costs, demonstrating the interconnectedness of global politics and your monthly payments.
The average rate for a 30-year fixed-rate mortgage climbed by 10 basis points to 6.86% in the week ending April 10, according to data provided to BW by Zillow. A basis point represents one one-hundredth of a percentage point. This jump marked the highest interest rate for the 30-year mortgage since late January.
Transition from a Decline to an Increase
The weekly average rate for the period from April 4 to April 10 reflects fluctuating trends. The journey over those five days was turbulent.
On April 2, President Trump announced a new set of tariffs – taxes on goods imported from foreign countries. The burden of these tariffs would likely fall on consumers, potentially leading to increased inflation. Rising inflation typically triggers an uptick in interest rates.
However, after a day of reflection, mortgage rates saw a slight decrease on April 4.
The market sentiment shifted over the weekend, resulting in a rise in the 30-year mortgage rate on Monday, April 7. This upward trend continued from Tuesday to Thursday, pushing the weekly average higher.
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Warning Sign for International Investors
Mortgage rates often fluctuate in tandem with yields on the U.S. government’s debt. Following the tariff announcement, the yield on the 10-year Treasury note initially dropped but then surged over the weekend.
Some analysts suggest that the spike in Treasury yields is not solely a response to inflation concerns. It may also reflect unease over a more unpredictable and confrontational trade policy, as noted by Greg Ip, the Wall Street Journal’s chief economics commentator. This shift could make it riskier for foreign investors.
Stay Calm and Maintain Communication with Your Lender
If you’re in the market for a mortgage, the sudden rate shifts may be unsettling. The future interest rate landscape is more uncertain than usual. To find peace of mind, acknowledge that you cannot control presidential actions or their impact on mortgage rates.
Nevertheless, you have agency. Keep a close eye on mortgage rate movements and collaborate with a loan officer to determine the optimal time to lock in your rate.
“Given the expected volatility in mortgage rates, buyers should ensure their financial readiness to capitalize on rate drops when they occur,” advised Lisa Sturtevant, chief economist for Bright MLS, a real estate database covering mid-Atlantic states.
Lastly, show empathy towards your loan officer, who is navigating the same unpredictable journey as you. When you seek guidance on whether to lock or float your rate, remember that it’s a daunting decision for them as well. The uncertainty is shared.