Mortgage rates jump past 7% amid tariff turmoil, clouding spring housing market

The average 30-year fixed mortgage rate surged to 7.1% on Friday its highest level since mid-February throwing a curveball into the critical spring housing market. The spike, reported by Mortgage News Daily, follows a volatile week in the bond market driven by President Donald Trump’s aggressive new tariffs and global economic uncertainty.

Mortgage rates, which closely track the yield on the 10-year Treasury note, reacted sharply to the week’s tariff drama. Yields initially spiked when Trump imposed sweeping tariffs on dozens of countries, then briefly dipped when he softened the terms. But with tariffs on Chinese imports standing firm at 145%, investor anxiety returned, triggering a sell-off in bonds and pushing mortgage rates higher once again.

“This is either the end of the worst week for 10-year yields since 1981, or the end of a fairly average two weeks in line with the last 18 months,” said Matthew Graham, COO at Mortgage News Daily. “Either way, it’s been brutal.”

Graham’s comments reflect a broader concern among financial analysts: the bond market, which typically signals long-term economic confidence, is flashing warning signs. Despite a cooler-than-expected inflation report, rates soared suggesting deeper unease tied to policy uncertainty and the global trade environment.

For homebuyers, the timing couldn’t be worse. Spring is traditionally the busiest season for real estate — but higher borrowing costs may cool enthusiasm, particularly among first-time buyers already facing high home prices and limited inventory.

Nancy Lazar, chief global economist at Piper Sandler, was blunt in her assessment: “Forget about housing in this environment. With mortgage rates back up and consumers concerned about the job market, housing will also be on the weak side.”

Rising mortgage rates can significantly impact affordability. A jump from 6.5% to 7.1% on a $400,000 loan can mean an extra $150–$200 in monthly payments — enough to push many would-be buyers out of the market entirely.

As housing jitters grow, consumer confidence is also faltering. A report released Friday showed sentiment dropping far more than analysts expected, with inflation expectations rising from 5% in March to 6.7% in April the highest level since 1981.

While actual inflation data remains relatively stable, the psychological impact of the tariff-fueled headlines appears to be unsettling consumers and investors alike.

All eyes are now on whether the bond market can find its footing and if mortgage rates will retreat as the tariff dust settles. For now, volatility appears to be the only certainty.

With Trump’s trade policies continuing to evolve, and concerns about inflation and employment lingering, the housing market may remain under pressure in the weeks to come.

For buyers and sellers navigating today’s climate, adaptability and a strong dose of patience will be essential.