How Tariffs and Market Volatility Could Impact Your Clients' Mortgage Rates in Dallas, Texas

According to Google:

"Based on recent reports, tariffs have become a significant factor in the housing market and mortgage rates.

• Broad Tariffs Announced: In April 2025, President Trump announced a broad set of tariffs including a 10% baseline tariff on all imports, with additional rates on specific countries.
• Negotiations and Uncertainty: While a 90-day pause was initially announced on the higher tariffs (excluding the 10% base rate) to allow for negotiations, there have been mixed signals and ongoing discussions with various trading partners.
• August 1st Deadline: President Trump has stated that the US will begin collecting tariff revenue for newly announced "letter" tariffs on August 1st, 2025, and no extensions will be granted.
• Impact on Mortgage Rates:
  • Initial Drop, Then Volatility: Following the initial tariff announcements, there was a brief dip in mortgage rates as investors sought safe assets like Treasury bonds, according to Redfin. However, since then, rates have become volatile, with some upward movement due to market uncertainty and inflation concerns.
  • Inflationary Pressures: Tariffs can contribute to inflation by increasing the cost of imported goods, particularly building materials. This can lead the Federal Reserve to consider raising interest rates, which, in turn, can cause mortgage rates to rise.
  • Bond Market Impact: Mortgage rates tend to follow the yield of the 10-year Treasury bond, according to CNET. Tariff uncertainty can lead to increased bond market volatility and higher yields, which pushes mortgage rates up.
  • Uncertainty and Caution: The overall economic uncertainty caused by tariffs and potential trade wars makes investors cautious and can impact borrowing costs across the board.

• Rising Construction Costs: Tariffs on materials like steel, lumber, and appliances can increase building costs, leading to higher new home prices. Estimates for the increase in new home costs due to tariffs range from $9,200 (National Association of Home Builders) to potentially higher figures depending on the specific tariffs and how costs are passed on.
• Potential for Higher Mortgage Rates: While there was a brief dip in rates, the threat of inflation driven by tariffs and general market uncertainty increases the potential for higher mortgage rates in the future.
• Reduced Affordability: Higher home prices and potentially higher mortgage rates can reduce housing affordability, making it harder for some buyers to enter the market.
• Consider Locking in Rates: Given the potential for rate increases, it's advised for homebuyers to stay informed about mortgage rate movements and consider locking in a fixed rate if they find one they are comfortable with.

In today’s fast-paced financial landscape, staying informed about the factors that can impact mortgage rates is crucial for real estate agents and their clients. One of the key elements to consider is the influence of tariffs and market volatility. Understanding how these elements interact can help you provide valuable insights to your clients, positioning you as a trusted advisor in their home-buying journey.

Let’s start with a brief overview of tariffs. Tariffs are taxes imposed by governments on imported goods. When a country places tariffs on certain products, it can increase the cost of those products. This can lead to higher prices in the economy, creating inflationary pressures. For your clients, this means that if they’re looking to secure a mortgage during a time of high tariffs, they might face higher interest rates. Lenders often adjust rates in response to the costs that tariffs impose on the overall economy.

Now let’s talk about market volatility. This term refers to the rapid and unpredictable changes in the financial markets. Market volatility can be driven by various factors, including economic data, geopolitical events, and changes in investor sentiment. When markets are volatile, uncertainty rises, and lenders may raise mortgage rates to mitigate risk. For your clients, this could mean that waiting to secure a mortgage might not be the best strategy. A sudden spike in volatility could lead to higher rates, making it more expensive for them to borrow money for their new home.

The interplay between tariffs and market volatility can create a complex environment for mortgage rates. For instance, if tariffs lead to increased inflation, this can trigger a response from the Federal Reserve, which may decide to raise interest rates to combat inflation. In turn, this can lead to an uptick in mortgage rates. As real estate agents, understanding this cycle allows you to guide your clients more effectively.

Your clients may also be influenced by the type of mortgage they’re considering. Fixed-rate mortgages offer stability, as the interest rate remains the same throughout the life of the loan. On the other hand, adjustable-rate mortgages (ARMs) can be appealing when rates are low, but they come with the risk of increasing rates in the future. If tariffs and market volatility are causing rates to rise, ARMs may become less attractive.

So how can you help your clients navigate these challenges? First, educate them about the current economic climate. Share insights on how tariffs and market volatility could impact their mortgage rates. Providing this knowledge can empower them to make informed decisions about when to buy.

Additionally, encourage your clients to consider their long-term goals. If they plan to stay in their home for many years, a fixed-rate mortgage might be the best choice, even if current rates are slightly higher. This way, they lock in a rate that won’t change, regardless of market conditions.

Stay connected with mortgage professionals who are well-versed in these topics. Partnering with knowledgeable loan officers can give you access to the latest trends and forecasts in the mortgage market. This partnership can enhance your ability to assist clients effectively. When agents work closely with mortgage experts, they can provide clients with timely advice that takes into account the impact of tariffs and market fluctuations.

Another important aspect to consider is the timing of a purchase. If your clients are on the fence about buying a home, explain how waiting for market conditions to improve could result in higher costs in the future. With tariffs potentially driving up prices in various sectors, delaying a home purchase might not be in their best interest.

Encouraging your clients to keep their financial house in order is also essential. A strong credit score can significantly impact the mortgage rates they qualify for. Advise them to check their credit reports and address any issues before applying for a mortgage. This proactive approach can ensure they get the best possible rate, even in a fluctuating market.

It’s also wise to discuss the benefits of being pre-approved for a mortgage. When your clients have a pre-approval letter in hand, they demonstrate to sellers that they are serious buyers. In a competitive market, this can give them an edge, especially if rates are trending upward due to tariffs or market volatility.

In your communication with potential clients, emphasize the importance of flexibility. The mortgage landscape can change quickly, and being adaptable can be a significant advantage. Encourage them to stay informed and be ready to act when the time is right. Keeping an eye on news related to tariffs and market shifts can help them make timely decisions.

Utilize technology to stay ahead. Many tools can help you track market trends, including rate fluctuations influenced by tariffs. Leverage these resources to provide your clients with up-to-date information. A well-informed agent can help clients feel more secure in their decisions and build trust in your expertise.

Incorporate regular updates and discussions about the economic landscape into your client conversations. Whether through newsletters, social media, or personal calls, keeping the lines of communication open will ensure that your clients view you as a valuable resource. When they feel supported and informed, they are more likely to rely on your services for their mortgage needs.

Finally, don’t hesitate to reach out to a mortgage professional to discuss specific scenarios that your clients may face. Each client’s situation is unique, and having personalized insights can elevate the service you provide. By collaborating with a skilled mortgage loan officer, you can ensure that your clients are well-prepared to navigate the complexities of mortgage rates influenced by tariffs and market volatility.

As you continue to help your clients achieve their real estate dreams, remember the importance of understanding the broader economic context. By staying informed and leveraging your relationships with mortgage professionals, you can provide exceptional guidance. Your efforts will not only help your clients but will also strengthen your position as a trusted real estate agent in your community.

If you’d like to discuss how tariffs and market volatility could impact your clients' mortgage rates in more detail, I encourage you to reach out. Let’s connect and explore how we can work together for the benefit of your clients.