How Tariffs Affect Mortgage Rates

Tariffs aren’t just about international trade—they can have a direct impact on mortgage rates, affecting anyone looking to buy a home or refinance.

What Are Tariffs and Why Do They Matter?
Tariffs are taxes on imported goods designed to protect domestic industries. When tariffs are applied, imported products become more expensive. This often forces businesses to raise prices, contributing to inflation.

Tariffs, Inflation, and the Federal Reserve
Higher costs from tariffs can lead to overall inflation in two ways:

• Businesses pass higher supply costs on to consumers.
  
  

• Supply chain disruptions create delays and added expenses.
  

When inflation rises, the Federal Reserve may raise interest rates to slow down the economy—making mortgages more expensive.

Tariffs and Financial Markets
Tariffs can also affect investor behavior. If tariffs create uncertainty, investors often buy U.S. Treasury bonds, pushing yields—and mortgage rates—lower. But if tariffs are seen as boosting the economy, investors may sell bonds, causing yields and mortgage rates to rise.

What Homebuyers and Homeowners Should Know
Tariff-related news can cause mortgage rates to fluctuate. If rates seem likely to rise, it may be wise to lock in a rate sooner. If economic uncertainty is driving rates down, waiting could lead to better options.

Understanding how tariffs influence the bigger economic picture can help borrowers make smarter decisions when it comes to financing their homes.