Tariff War Begins—Brace for Fireworks 🧨🧨🧨

Hello everyone! It’s been a whirlwind week for the mortgage and real estate world, with everything from tariff drama to a Fed standoff. Grab a seat—let’s break down the news!

Lets dive in!

Read time: ~3 minutes

Rates ended FLAT compared to last week, and volatility was HIGH. Rates are in the low 7’s for most loan types without paying discount points. Paying discount points can get you in the mid to high 6’s.

Tariff War Begins—Brace for Fireworks 🧨🧨🧨

Just when we thought mortgage rates might ease a bit, reality hit this weekend with news of a looming tariff war. 🤦‍♂️

Initially, President Trump announced 25% tariffs on Canada and Mexico, plus 10% on China. The minute this dropped on Friday, mortgage rates immediately lost most of the gains they’d made earlier in the week. 😭

However, there's a twist: as of this morning, the tariffs on Mexico have been delayed for a month, offering a bit of breathing room. That said, why did rates jump at the mere threat of tariffs? Markets see tariffs as inflationary—importers facing extra fees will likely pass higher costs to consumers, fueling short-term price increases. And remember, markets are forward-looking, so even a whiff of potential inflation often pushes mortgage rates higher.

But ironically, as we head into Monday, we’re already seeing mortgage rates claw their way back. This rebound implies that investors might be more worried about tariffs hurting economic growth than driving inflation—further proof that uncertainty and chaos define Trump’s approach to policy-making.

Should you be concerned? Don’t panic. I don’t expect sweeping tariffs on every country for the entire Trump era. My team’s take is that this is about negotiating better trade deals, just like in 2018 when many tariffs were lifted by mid-2019. So yes, expect short-term market drama, but likely not a permanent state of tariffs.

Trump Presses for Rate Cuts, Powell Pumps the Brakes

The tension between President Trump and Fed Chair Jerome Powell is seriously heating up. Last week, Trump told the Fed: “I’ll demand that interest rates drop immediately,” setting the tone for this week’s major Fed meeting.

On Wednesday, Powell stuck to his guns. Rates remained steady, effectively ending the string of cuts we’ve seen since September. He didn’t mince words about it, either—he signaled no urgency to budge on rates. And when asked about Trump’s demands, Powell sidestepped, declining to address the president’s comments on interest rates.

Trump wasted no time firing back: “Because Powell and the Fed have failed to stop the inflation problem they created, I will do it by unleashing American energy production, cutting regulations, rebalancing international trade, and revitalizing American manufacturing.”

But here’s the bottom line: the president can’t force rate cuts. The Fed operates independently, basing decisions on real economic data—not political pressure. Powell is waiting to see how inflation, labor figures, and Trump’s tariff strategies play out before making any moves.

For now, markets are betting we won’t see a cut anytime soon—Polymarket shows an 86% chance of no change at the Fed’s March meeting.

It's a BIG Week for JOBS! 📅

• Tuesday - JOLTs Job Openings Data : Fewer openings could signal a slowing economy, potentially leading to lower mortgage rates. Forecast currently 7.88M.

• Wednesday - ADP Employment Data : More employment data released on Wednesday. Could see a big swing in rates depending on the data that is released. Forecast currently 149K.

• Friday - January Jobs Report : This is the most important employment data released this week. Forecast currently 154K jobs added (256K previous report) and unemployment rate will remain unchanged at 4.1%.

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