Will tariffs affect mortgage rates? What to know about the housing market.

As stock markets plunged and economists warned of a potential recession after President Donald Trump’s implementation of massive new tariffs this week, some Americans wonder whether there may be a silver lining — lower mortgage rates.

Home loan rates, meanwhile, have dropped slightly in recent years, and many are watching whether they’ll fall further. The average 30-year fixed-rate mortgage, at 6.82 percent a year ago, was 6.6 percent as of Thursday, according to national mortgage giant Freddie Mac.

But mortgage rates aren’t the only factor ruling the housing market. As housing costs remain at an all-time high and uncertainty reigns in Washington, experts say there may not be much relief for aspiring home buyers.

Will mortgage rates be affected by tariffs?

It’s not entirely clear how tariffs will affect borrowing rates in the long term, experts told The Washington Post. The new policy has created vast uncertainty about the economy, which in turn will likely affect the housing market in myriad ways.

“Mortgage rates are currently lower than they were, and are at the lowest point of this year,” said John Cain, director of secondary marketing at KeyBank. “But as far as rates going substantially lower, it’s too early to tell.”

While tariffs won’t “directly impact” rates, Cain said, the economy’s volatility likely will.

The nation began to see that this week, said Greg McBride, chief financial analyst for Bankrate.com. The uncertainty prompted many investors to put money into bonds, which drove down the returns those investors could expect. “That lowered mortgage rates and many other borrowing rates as well,” McBride said.

But the overall economic outlook still presents a hurdle for most prospective homeowners. “If people are worried about their job, or their own personal economy,” McBride said, “it’s not the environment when you’re going to want to take the plunge and buy a house.”

Simply put, he said, “If the economy stinks, nobody wants to buy a house.” And as household budgets are strained, that may make qualifying for a mortgage difficult. People may be saddled with more debt and less savings.

What will happen to mortgage rates will also depend on what the Federal Reserve decides to do next — fight inflation by keeping interest rates high, or fight unemployment by lowering rates, said Chen Zhao, who leads economic research at the real estate company Redfin.

There are other factors as well, Cain said — like how other countries react and how long the tariffs stay in place.

“We haven’t done this before, not in my lifetime, certainly, not in most people’s lifetimes,” he said. “The final impact, I don’t think is known.”

Will tariffs affect housing costs?

Tariffs will drive construction costs higher, which means new homes will cost more.

The National Association of Home Builders estimates that about 7 percent of material used in new-home construction last year originated from a foreign nation. A vast swath of those materials come from China, which was slammed with a 34 percent tariff, said Jim Tobin, CEO of the association. The list of home-related products from China is long, he said: electronic ceiling fans, light fixtures, hinges, nails and more.

McBride added that fewer homes may be built, which would drive prices higher.

What should homeowners do?

Homeowners who have taken out a mortgage in the past two-and-a-half to three years should consider refinancing, McBride said, adding that cutting a monthly payment will be particularly impactful now, as the cost of living is expected to rise.

If you were planning to sell, now is as good a time as ever, said Matt Feris, a Redfin agent.

“You can’t really time the housing market any more than you can time the stock market,” Feris said, adding, however, that spring is always the best season to sell and the housing market has been more active this year than usual.

The same logic applies to buyers — if you find the right house and you can afford it, he said, buy the house.

“It’s more important than ever to make sure you’re getting good advice and pricing appropriately in this market,” said Danielle Hale, chief economist for Realtor.com. People hoping to make improvements on their house before putting it on the market should also be aware that it might take a little bit longer and cost a little more this year as housing professionals react to the tariffs, she added.

“But if now is the time for you to make a change in your housing situation,” she said, “you can absolutely do that.”

What about renters?

Tariffs could indirectly affect rental prices. Higher insurance costs could mean higher rents, and higher property taxes could mean the same if the tariffs hit state and municipal budgets, McBride said.

“It’s not something that would happen overnight, but you could get some hit there,” he said.