Yesterday I wrote about how the uncertainty about customs rates hurt the mortgage rates.
In short, the market does not know what to do with the tariffs considering the constant flip-flopping.
One day the tariffs are on. The next day they are gone. Then they are turned on again. Then there are new ones. Then they are worldwide!
It gets old, and in the process, other countries seem to lose interest in doing business with the United States. Apparently Canadians don’t buy us-made products now …
At the same time, the good Run-Realkreditrenter, who enjoyed from mid-January to March, seems to be over. And there is now a real fear that we could return to 7% mortgage rates.
Could mortgage rates go back to 7%again?!
At the beginning of March, I asked a seemingly straightforward question. Will mortgage rates go to 5.99% or 7% next time?
This was when the 30-year-old fasting hovered about 6.75%, but seemed to be on a clear downward course.
It seemed as if a 75-base drop was needed, the rates were actually on their way to less than 6% as opposed to 7%.
But basic math tells us that moving 25 BPS is easier than it is 75 BPS, and now we knock on 7’s door again.
If you are considering monthly payments, it’s not a huge difference. A loan amount of $ 400,000 set to 6.75%is $ 2,594.39 per Month.
It’s only about $ 67 more for a payment of $ 2,661.21 with an interest rate of 7%.
But crossing the 7% limit is a massive psychological hit. And not just because it is a threshold, but because it is someone we have already crossed several times.
It’s like paddling out into the sea to catch a wave and be bombarded by wave after wave.
When you think you’ve reached it past the break, you get up in the air and another wave draws you under again.
It is exhausting, it is demoralizing, and in the end you might just throw the towel in and quit.
And maybe that’s what some potential home buyers are considering today. How much more can they really take?
How many more main falsifications can they cope with when it comes to mortgage rates? They still hear that they are going lower, only to see them jump back.
Despite what you may have heard, the priority rates have not really come anywhere recently
If we are considering Trump’s promise to lower the mortgage and rhetoric now that they have achieved this goal, it is even worse.
When it comes to it, the 30-year-old fasting has basically gone nowhere since mid-October.
Prices rose when Trump was the expected winner a few weeks before the election, and then continued to climb when he won his expected inflation policy (see the chart above).
Then they simply came back when his appointed Treasury Secretary Scott Bessent reassured everyone’s nerves and said that duties and the like would not be so bad.
He also reassured rattled investors (and home buyers) by repeating that the administration was obliged to lower interest rates.
But times have changed. Today, he told people that the White House is focused on the “real economy” and not “a little bit of volatility” in the markets.
The problem is that the market seemed to buy it before, but now their patience has run out.
The S&P 500 has entered the correction area, down 10% from the record height seen in February.
And the 30-year-old fasting is back to 6.78%per year. MND’s Daily Index, which is not much progress (if at all) considering the corresponding stock market.
You would expect interest rates to be much lower with shares selling as poorly as a flight to security in bonds typically takes place.
Not at the moment, with stocks and bonds selling together. So potential buyers feel poorer and prices are not better. Great!
We could risk missing out on another key spring shopping season
The big concern now, at least in my mind, is that we could be in danger yet another spring home purchase season.
This is a top home purchase and sales time, and the last thing we want is an increase in interest (again).
Last year, the mortgage rates were at similar levels and then rose to 7.50% in April, which put a damper on home purchases.
It took the wind out of the housing market’s sail and could happen again if the trade war company does not end.
The result was then the lowest existing home sales sale since 1995, with just over four million sold in 2024.
If Trump continues to make new customs threats, I can’t imagine that mortgage rates see a lot of improvement.
They may be stuck around the current levels or they could crawl up again and violate 7%. In my opinion, it would be a gut stance for potential home buyers.
Priceability is already terrible and it risks getting worse. Meanwhile, the home sale fell to another low time in January according to the National Association of Realtors.
And between rising redundancies, customs and trade wars, a stunning stock market and just general uncertainty, I do not see that many buyers are coming up to the record. Why would they?
If the administration is not acting quickly to solve this, we could see another gloomy year of home sales.
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.