What does Trump's Economic Plans mean for Mortgage Rates in 2025

What does a 2nd Trump Presidency mean for future mortgage rates?

A question to future homebuyers: how President-elect Donald Trump’s proposed economic moves might shape mortgage rates in the coming year? Whether you’re looking to buy your dream home, refinance, or just curious about how politics plays into your wallet, here’s the lowdown.

The Current Mortgage Scene

Right now, mortgage rates are stubbornly high—hovering around 7%, which is near a 20-year peak. Ouch, right? Even though the Federal Reserve has been cutting interest rates recently, mortgages haven’t budged much. Why? Because factors like economic growth expectations and those pesky 10-year Treasury bond yields are keeping them up.

Tariffs and Inflation: A Recipe for Higher Costs?

Trump’s got big plans to shake up trade policies, including slapping a 25% tariff on imports from Mexico and Canada and a 10% tariff on Chinese goods. What does that mean for us? Well, tariffs tend to make everyday goods pricier, which could push inflation up by about 1%.

If prices climb too fast, the Fed might put the brakes on those interest rate cuts, leaving borrowing costs—like mortgages—high.

Higher inflation usually makes the Fed nervous. If prices climb too fast, the Fed might put the brakes on those interest rate cuts, leaving borrowing costs—like mortgages—high. So, while these tariffs might aim to protect U.S. businesses, they could also pinch consumers’ pockets. For a deeper dive into tariffs and inflation, check out this article.

Tax Cuts: A Double-Edged Sword

Trump’s also pitching significant tax cuts for both individuals and businesses. On one hand, more money in your pocket could stimulate economic growth. But here’s the kicker: a booming economy often leads to—you guessed it—higher inflation. And higher inflation could mean higher mortgage rates. It’s a bit of a balancing act, and no one knows exactly how it’ll play out.

What Does This Mean for You?

If you’re thinking about buying a home or refinancing, these policies might keep mortgage rates on the higher side in 2025. That said, it’s not all doom and gloom. Rates depend on a lot of factors, like how the Federal Reserve handles inflation and how the broader economy responds. For tools to monitor rates, visit Freddie Mac’s Mortgage Rates page.

Bottom Line

Trump’s economic plans aim to rev up the economy, but they might come with some side effects—namely, higher inflation and potentially higher mortgage rates. So, keep an eye on the news and consider locking in a rate sooner rather than later if you’re in the market for a mortgage.

Stay tuned, and let’s see how this unfolds. The housing market might get a little bumpy, but being informed is your best defense. Cheers to navigating 2025 like a pro!