Big news on mortgage rates! With the U.S. and China striking a 90-day truce on tariffs, everyone’s asking: Will mortgage rates go down? Let’s break it down in a way that’s easy to understand.
What’s Happening?
Stocks are up, and bond yields are climbing after this trade deal news.
While trade deals are great for the economy, they don’t always mean good news for mortgage rates. Here’s a simple guide to what could happen next:
1. If We Avoid a Recession, Rates Stay High
A strong economy usually keeps mortgage rates high. So, if the economy avoids a recession in 2025, rates could hover between 6.75% and 7.25%. Think of it this way: A booming economy means less reason to cut rates, even if we all want them lower.
2. Better Mortgage Spreads Might Help
Mortgage rates could improve if markets calm down. After all the tariff chaos, spreads (the gap that impacts mortgage rates) have started to stabilize. If this keeps up, rates might stay between 6.55% and 7.25%—not amazing, but not worse either!
3. If the Economy Struggles, Rates Could Fall
If things take a turn for the worse—like job losses or weaker growth—the Federal Reserve might cut rates further. This could push mortgage rates closer to 6%, which is great if you’re looking to buy a home or refinance.
Why This Matters
Here’s the kicker: Trade deals can stabilize things, but a strong economy often means higher rates. Lower rates usually happen during tough times, which might be good for buyers but not for the economy overall.
Related
Mortgage Rates Today: Why They’re Higher Than Expected and What You Need to Know
Will Mortgage Rates Drop in 2025? Here’s What You Need to Know
Mortgage Rates in 2025 Will They Finally Drop Below 6%?
Bottom Line
We’re not out of the woods yet. Keep an eye on the news about trade, the economy, and jobs. The more stable things get, the more predictable rates will be—but that might not mean they’ll drop anytime soon.