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Posted April 15, 2025 in Blog / Education

How Tariffs Could Affect Future Mortgage Rates

If you’re thinking about buying a home or refinancing your current mortgage, there’s more than just interest rates and home prices to consider. One often-overlooked factor that could impact your borrowing power? Tariffs.

What Are Tariffs?

Tariffs are taxes imposed by a government on imported goods. When the U.S. places tariffs on products coming from other countries (like steel, aluminum, electronics, or consumer goods), it can trigger a chain reaction that affects the overall economy.

How Do Tariffs Impact the Economy?

Tariffs tend to raise the cost of imported goods. This can lead to:

  • Higher consumer prices
  • Slower business investment
  • Uncertainty in global markets

In short, tariffs can contribute to inflation, which is a key player in how mortgage rates are determined.

The Tariff-Mortgage Rate Connection

Mortgage rates are closely tied to inflation and the overall health of the economy. When tariffs raise prices, inflation can creep up. To combat inflation, the Federal Reserve may raise its benchmark interest rate, which can indirectly push mortgage rates higher.

Here’s the chain reaction in simple terms:

Tariffs → Higher costs → Rising inflation → Fed rate hikes → Higher mortgage rates

That means if trade tensions rise and tariffs increase, mortgage rates could follow.

What This Means for Homebuyers and Homeowners

If you’re planning to buy a home or refinance your mortgage in the near future, it’s smart to stay informed on economic policies, especially tariffs. Even if they seem unrelated, these policies can influence what you’ll pay in interest over the life of your loan.

A small rate increase might seem minor, but even a 0.5% bump in your mortgage rate can add tens of thousands of dollars over the life of a 30-year loan.

The Bottom Line

You can’t control global trade decisions, but you can take control of your home financing strategy. Staying ahead of market shifts is key, and working with a team that understands these trends can make all the difference.

At Fairway Heartland, we use smart tools and market insight to help you make informed mortgage decisions — whether you’re buying your first home, refinancing, or planning your next move.

Want to know how current trends might affect your mortgage options? Let’s talk.

Sources:

  • Federal Reserve – Monetary Policy
  • CNBC – How Tariffs Affect the Economy
  • Investopedia – Mortgage Rate Determinants