Mortgage Market Evolution: The Impact of Tariffs, Rising Rates, and the Growing Role of Private Credit
Your Weekly Briefing on Mortgage Rates, Housing Affordability, Private Credit Trends, and the Impact of Tariffs on Homeownership
What's Included:
The impact of new tariffs on mortgage rates, home prices, and housing affordability.
How many workdays the average American needs to pay their monthly mortgage.
The latest trends in mortgage rates and what could influence future movements.
The growing role of private credit in the residential mortgage market.
Here’s a complete low-down 👇
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Rising Tariffs, Rising Costs: How New Trade Policies Could Impact Your Mortgage
President Trump’s newly announced tariffs could have a significant impact on mortgage rates and home prices, making homeownership even more expensive. The 10% baseline tariff, along with additional duties of up to 49% on certain countries, may drive inflation higher as businesses pass increased costs on to consumers. When inflation rises, bond yields typically increase, leading to higher mortgage rates. If the Federal Reserve keeps interest rates elevated to combat inflation, homebuyers may see borrowing costs remain high for longer than expected.
On the other hand, if tariffs slow economic growth, mortgage rates could eventually decline. A weakening economy often pushes investors toward safer assets like Treasury bonds, lowering yields and, in turn, reducing mortgage rates. However, the uncertainty surrounding trade policies has already caused market volatility, with stock prices falling and economists revising their GDP growth forecasts downward. Some analysts predict that a trade-driven slowdown could increase the likelihood of a recession, which might lead to lower mortgage rates in the long run.
Beyond mortgage rates, tariffs also affect home prices by raising construction costs. Builders rely on imported materials like lumber, steel, and appliances, which are now subject to higher tariffs. The National Association of Home Builders estimates these increased costs could add nearly $9,200 to the price of a new home. While mortgage rates fluctuate based on economic conditions, these additional costs could permanently impact housing affordability, making it harder for many Americans to buy a home…. Read More.
How Many Workdays Does It Take to Pay Your Mortgage?
Homeownership is more than just a financial commitment—it’s a time investment. According to new data from Realtor.com, the average American now spends 10 full workdays per month just to cover their mortgage payment on a median-priced home of $412,000. This burden is even higher in states like Hawaii and California, where homeowners must work 15 to 17 days per month just to meet housing costs. The widening gap between home prices and incomes, combined with elevated mortgage rates, has made affording a home a greater challenge than ever.
Housing affordability now varies significantly by location. In high-cost states like Hawaii, homeowners face mortgage payments exceeding $5,200, demanding nearly an entire month’s paycheck. Meanwhile, in more affordable states like Ohio and West Virginia, mortgage payments require only six to seven workdays per month. These regional disparities highlight the growing difficulty of homeownership in competitive markets, where buyers must dedicate more of their earnings—and time—to housing costs.
For many, the “workdays per month” metric is becoming a new reality check for home affordability. As mortgage rates remain high and home prices continue to climb, prospective buyers must carefully weigh not just the financial cost, but also the time investment required to own a home in today’s market…. Read More.
Mortgage Rates Steady After Three-Day Drop – What’s Next?
The average rate for a 30-year fixed mortgage remained at 6.78% on Wednesday, holding onto a three-day downward trend from recent highs. While this rate is still higher than the year’s low of 6.50%, it marks a notable drop from January’s peak of 7.13%. Other mortgage products, such as the 15-year fixed loan and jumbo mortgages, also experienced mixed movements, highlighting ongoing market fluctuations.
Despite recent declines, mortgage rates remain significantly above historical lows, reflecting broader economic conditions. Last year, 30-year rates hit a 23-year peak of 8.01% in October before easing. Economic factors like Federal Reserve policies, bond market trends, and lender competition continue to shape rate movements, making it essential for borrowers to monitor the market and compare offers.
Looking ahead, mortgage rates may see further adjustments depending on inflation trends and potential Fed rate cuts. While the central bank has signaled a cautious approach to policy changes, any shifts could impact borrowing costs. Homebuyers and refinancers should stay informed and evaluate their options to secure the most favorable rates in this evolving landscape…. Read More.
How Private Credit is Disrupting the Residential Mortgage Market
Private credit firms are increasingly entering the $50 trillion residential mortgage market, aiming to fill gaps left by traditional banks. Historically focused on middle-market business lending and large buyouts, these lenders are now targeting asset-based financing, including home loans that fall outside the purview of Fannie Mae or Freddie Mac. This shift is driven by the growing demand for non-traditional loans amid elevated interest rates.
Homeowners are turning to products like home equity lines of credit (HELOCs) to leverage their property's increased value without refinancing their existing low-rate mortgages. The outstanding volume of such products rose by $9 billion to reach $400 billion in the fourth quarter of 2024, marking the eleventh consecutive quarterly increase. While banks have traditionally provided these loans, the regional banking crisis in 2023 has opened opportunities for private credit firms to step in.
Private lenders can finance these loans and repackage them into bonds of varying risk profiles for investors. Investor interest in residential mortgage bonds has surged, with sales up more than 30% so far this year. As non-bank originators, lacking substantial capital, increase loan production, private credit firms are well-positioned to provide necessary funding, signaling a significant shift in the residential mortgage landscape…. Read More.
That’s a wrap for this week’s edition. Stay informed on mortgage rates, trade policies, private credit trends, and housing affordability. Get expert insights and key updates delivered straight to your inbox. Subscribe now to navigate the evolving mortgage landscape with confidence.