Could Upcoming Tariffs Lead to Higher Mortgage Rates? Key Insights for Homebuyers | Global News Avenue

President-elect Donald Trump’s promises tariff Economists and homebuyers are considering the possibility of higher mortgage rates in 2025.

Trump’s proposed tariffs

The former and future president has been outspoken about his plans to impose tariffs on imports as soon as he takes office. He proposed imposing 25% tariffs on Canadian and Mexican products. Tariffs on Chinese products could be as high as 60%, and blanket tariffs on all imported goods are possible.

How mortgage rates will be affected

Redfern reports 30-Year Mortgage Rates It rose from 6.2% on October 1 to 7.13% the day after the election. However, the real estate company noted that it is too early to tell whether this increase will become a long-term trend.

Tariffs could push up inflation if businesses pass on increased costs of goods to consumers. Higher inflation usually means higher interest rates.

Economists and businesses have been fiercely opposed to the proposed tariffs. It’s unclear what legal resistance Trump would face if he implemented the measures.

Other factors that affect mortgage rates

many different factors It’s not just tariffs that affect mortgage rates.

Trump proposed a series of tax cuts. These cuts will reduce government revenue and increase the budget deficit, which could put upward pressure on mortgage rates.

Fed Monetary policy can affect mortgage rates in a number of different ways. If the Fed wants to stimulate the economy, it will try to drive down interest rates. If its purpose is to drive down inflation, its actions could raise mortgage rates.

The bond market also affects how mortgage lenders set interest rates. Mortgage interest rates typically reflect 10-Year Treasury Bond Yield. The bond market appears to be expecting inflation to rise under Trump.

It remains to be seen how Trump will implement the economic policies discussed during the campaign, but economists don’t expect homebuyers to see a significant drop in mortgage rates.

bottom line

Trade tariffs proposed by President-elect Trump could put upward pressure on prices of goods imported from major trading partners such as China, Canada and Mexico. If importers pass these cost increases on to consumers by raising prices on potentially affected goods, such as food, cars and electronics, it could increase inflation, raising prime rates and 10-year bond yields. These are the main drivers of mortgage rates, which will eventually rise as a result of the tariffs.