Mortgage rates have dropped to their lowest level in six months in the aftermath of President Trump’s newly announced tariffs. For weary homebuyers who have been waiting for a break in housing costs, the decline ups their purchasing power.
A homebuyer on a $3,000 monthly budget can afford a $458,750 home with a 6.55% mortgage rate, the daily average on April 4. That’s the lowest daily average mortgage rate in six months.
The decline in rates is giving homebuyers more purchasing power. In the last eight days alone, a buyer on a $3,000 budget has gained roughly $9,000 in purchasing power, as rates fell from 6.82% on March 27 to 6.55% on April 4. A buyer on a $3,000 budget has gained $25,000 in purchasing power since mid-January, when mortgage rates hit 7.26% and that buyer could have purchased a $433,750 home.
To look at affordability another way, the monthly mortgage payment on the median-priced U.S. home, which goes for roughly $425,000, is $2,716 with today’s average mortgage rate. Just over a week ago, the payment would have been $2,777.
Mortgage rates dropped from 6.75% to 6.55% in just two days after President Trump announced a sweeping new tariff policy on April 2. The announcement sent shockwaves through the U.S. economy, pushing the stock market to its lowest level since the start of the pandemic and adding to concerns about inflation, potential layoffs and slower economic growth. The upheaval has also sent 10-year treasury yields down, resulting in lower mortgage rates, at least temporarily.
“Even in times of great economic uncertainty, there are people who need to move. For those weary homebuyers, this drop in mortgage rates could be a silver lining of this week’s historic tariffs announcement,” said Redfin Economics Research Lead Chen Zhao. “However, a word of caution for the general public: This is a wait-and-see moment. Tariffs and the fallout we’ve already seen in the stock market are impacting the economy and could create more volatility in the housing market.”
It’s also worth noting that even though mortgage rates have come down over the last week, housing costs are still near record highs.
Written by: Dana Anderson