One silver lining of the trade war: The lowest mortgage rates in months

Summerlin is a suburb about 20 minutes outside Las Vegas. 

Tariffs are driving chaos across markets, but the tumult is bringing some relief for US home buyers.

Mortgage rates have touched their lowest level since October, with the 30-year fixed rate falling to 6.61% last week, according to data published Wednesday by the Mortgage Bankers Association.

Loan rates closely track the Treasury yields, and have fallen sharply amid last week’s decline. The benchmark 10-year yield sank below 4% last Friday, as unexpectedly tough tariffs from the Trump administration prompted investors to buy bonds.

With borrowing costs falling, housing market activity has ballooned. MBA-tracked mortgage application volumes surged 20% through Friday, reaching a September high. Meanwhile, refinance applications roared to a six-month high.

“Both homebuyers and refinance borrowers were quick to take advantage of this dip in rates, driving the purchase index 24 percent higher than a year ago to the strongest pace since January 2024,” Joel Kan, MBA’s Vice President, said in a press release.

The data offers a reprieve for a market that’s slowed dramatically. High mortgage rates and pricing unaffordability have slashed homebuyer appetite, pushing pending home sale inventory to a five-year high in February.

However, the relief of lower mortgage rates could be short-lived.

The 10-year Treasury yield is already spiking higher again; by Wednesday, it returned to levels not seen since mid-February. Tariff uncertainty and a tit-for-tat trade war with China is causing investors to forgo these long-dated assets.

Analysts have previously signaled skepticism that mortgage lows would ever last. If anything, the market is bound to be volatile, as tariff-induced inflation worries cause drive bond yields back and forth.

Even if borrowing costs fall lower more permanently, levies are expected to boost housing prices as much as $9,200 per home. Meanwhile, demand may continue to suffer amid recession fears and consumer hesitancy.