How Trump’s wild tariff ride has changed mortgages

By Andrew Martinez

April 9, 2025 6:46 PM

The mortgage industry — and the economy at large — is feeling dizzy from President Trump’s tariff shuffle.

Trump’s announcement Wednesday afternoon to pause most tariffs, but to increase levies on China, shored up housing sector stocks after a recent rout. But the 30-year fixed-rate mortgage shot past 7%, as the 10-year Treasury yield remains elevated. 

Mortgage players have long-mulled how the nation’s housing market would fare under tariffs, as Trump has dangled the international levies since he took office. Mortgage consumers have also enjoyed the highs, and endured the lows, revolving around the president’s ever-changing tariff strategy.

Below we review recent developments around the Trump Administrations tariff changes.

US President Donald Trump during an executive order signing in the Oval Office of the White House in Washington, DC, US, on Wednesday, April 9, 2025. Trump signed an executive order Wednesday that seeks to revive US shipbuilding and will dispatch Elon Musk’s efficiency squad to investigate how the US Navy fell so far behind in turning out vessels. Photographer: Chris Kleponis/CNP/Bloomberg

 Tariff twist boosts mortgage stocks, interest rates still up

Most mortgage and housing stocks tracked by National Mortgage News were up on the day following Pres. Trump’s announcement on Truth Social pausing most tariffs.

The exception is China, where he pushed the tariff up to 125% effective immediately due to “the lack of respect” towards the markets.

Zillow’s rate tracker has the 30-year fixed rate mortgage at 6.99% midday on Wednesday, up 6 basis points on the day and 27 basis points from last week’s average of 6.72%. Lender Price data on the National Mortgage News website had that product over 7%.

Industry stocks were in the red most of the day, with the exception of Better Home & Finance, which was above its prior close. Rocket, UWM and LoanDepot each saw a sharp increase in stock price within the hour after the tariff pause announcement was made, but largely started trending back down again after 2 p.m.

Both Fannie Mae and Freddie Mac started the day up from their prior close, moved briefly below that before starting the upward climb again.

Read more: Tariff twist boosts mortgage stocks, interest rates still up

Treasury secretary calms tariff concerns

Hours before his boss’ announcement shook Wall Street, Treasury Secretary Scott Bessent suggested the American economy was on solid footing to weather tariff woes. He hinted at the negotiations that will apparently spare numerous countries but exclude China. Bessent cited the recent March jobs report

 which outpaced estimates, and included a bump in mortgage industry payrolls. 

Read more: Treasury secretary calms tariff concerns

 Housing market weathered pre-tariff storm

In the days following Trump’s “Liberation Day” tariff announcement, the stock market took a beating. Home builder shares lost 5% to 10% of their value

 the following morning, according to one report. Publicly-traded lenders and mortgage insurers however emerged relatively unscathed. Loandepot and Rocket Cos. saw gains by the end of the week, while insurers including Old Republic and Arch endured larger losses. On Thursday morning, 

As tariffs seemed all but certain, investment flowed into the bond market, allowing mortgage rates to bloom. The 10-year Treasury yield, a key metric for home loan rates, touched down briefly to 3.86%. The dip pushed the average 30-year FRM to 6.61%

, generating a surge in refinance activity.

Read more: Several housing stocks escape stock market rout

Execs discuss tariffs’ expected impact on RMBS

Home builders, a crucial cog in the nation’s housing market, are bracing for pain. Tariffs will add $17,000 to $22,000 to the cost of new home construction over the next 12 months, according to Cotality. That sector is also facing a potential labor shortage, should the Trump administration continue to step up immigration enforcement.

Capital markets players meanwhile should breathe a little easier. The outlook for the mortgage-backed securities market is stable, according to Fitch Ratings, although performance at the lower end of the credit spectrum could wane. 

Read more: Execs discuss tariffs’ expected impact on housing market

 Longer-term home price and industry stock reactions

A recession wouldn’t be a death knell for the housing market. In six of the last seven recessions, home prices remained high, according to Highway.AI. The outlier was the Great Financial Crisis in 2008, which Highway.AI CEO Barry Habib attributed to then-“crazy underwriting guidelines.”

Experts have also mulled industry stock picks amid the economic chaos. Bill Gross, a bond expert, recently favored real estate investment trusts

 AGNC Investment Corp. and Two Harbors. 

Not all homebuilder stocks are doomed in the face of tariffs. Venerated analyst Jay McCanless of Wedbush said he remains bullish on builders including Taylor Morrison and PulteGroup, and put outperform ratings on other building product and proptech stocks. Still, McCanless pinned neutral ratings on other firms including Lennar.

Read more: Tariff shock: Where smart money is going in mortgage, housing

A closely-watched Fed decision

Mortgage lenders will closely eye the Federal Reserve, which is now tasked with the difficult job of maintaining economic growth while keeping inflation down. While futures traders are mostly anticipating at least 75 basis points of cuts this year, other economic experts are cautioning of a stagflation-ary effect. 

The Federal Open Market Committee’s next meeting wraps May 7. Chairman Jerome Powell has signaled it would take a wait-and-see approach

, while Federal Reserve Bank of Atlanta President Raphael Bostic recently predicted just one interest rate cut

 through the rest of the year.

Read more: To cut or hike? Tariffs put Fed policy at a crossroads

Brewing uncertainty in home supply costs

Trump’s trade war rhetoric in early March

 gave some preview to today’s chaos. Despite Trump’s then-postponement of a 25% tariff on goods from Canada and Mexico, lumber prices rose

 as home builders faced an uncertain future. The National Home Builders Association, which voiced its concern about the levies, noted appliances, many of which are imported, would boost home prices

. 

The late-winter bout of economic uncertainty however bode well for lenders and consumers, as mortgage applications soared 20% on a weekly basis to start March

. 

Read more: Lumber prices climb as tariff uncertainty rattles builder

The early market jitters

The market began weighing President Trump’s tariff threat when he mulled levies on aluminum and steel imports

. Less than a month after Inauguration Day, homebuilder sentiment dropped to a five-month low

. Department of Commerce Secretary Howard Lutnick, one of the faces of tariff talk today, was an early cheerleader for tariffs

. 

Fannie Mae’s first economic forecast

 in the second Trump presidency provided more hints at the turmoil to come. Weighing then-unclear tariff plans, the industry leader downgraded its originations outlook for the year while upgrading its year-end mortgage rate prediction, to 6.6%.

The economic roller coaster started on President Trump’s first day in office, when he signed an executive order

 calling on his government to make moves promoting lower housing costs and increased housing supply.