Mortgage & Housing Update 4/11/2025

It was a wild, wild week, with stock and bond markets moving violently up and down in response to the Trump tariffs, China’s retaliation, and growing recession fears.

Meanwhile on updates specific to real estate: The spring inventory increase is underway! Buyers have more options today than they’ve had in several years. Will the affordability kill another spring home-buying season? Are you looking? Let’s talk!

🤩 I am a real estate professional, with an expertise in financing. Connect with me for a consultation and to get mortgage ready. I encourage you to get pre-approved.

Pauline Lee, Licensed MLO nmls# 674113 | pauline@indmortgage.com | (508) 525-5415 | https://www.indmortgage.com/mortgagehousingupdate20250411

Trump’s larger than expected global tariffs, China’s response, other countries scrambling for “deals” – the stock and bond markets whipsawed throughout the week, with average 30-year mortgage rates ending up HIGHER than they were two weeks ago. The NASDAQ Composite Index is now down 19% from where it was in mid-February. [Source: Mortgage News Daily]

Although my updates are meant to focus on real estate and mortgages, its hard to ignore the tariffs news because they directly affect inflation, the economy, the cost to build a new home, the Fed’s policy rate decisions, bond yields and mortgage rates! So bear with me while I attempt to summarize a wild 2 weeks.

April 2 — After markets closed, President Trump unveiled a new “base tariff” of 10% and “discounted reciprocal” tariffs that went as high as 90% (for Vietnam). China was hit with an additional 34% tariff. Note: Canada and Mexico were excluded from these new tariffs, because they already got hit with their own special tariffs a few weeks earlier.

April 3  – market reaction

Yield on 10-Yr US Treasury Bond: -8 bps to 4.05%
NASDAQ Composite Index: -6% to 16,551

April 4 — China retaliated with a 34% tariff on US goods, effective April 10.

Yield on 10-Yr US Treasury Bond: -2 bps to 4.01%
NASDAQ Composite Index: -3% to 15,558

April 7 — President Trump threatened an additional 50% tariff on China if they didn’t back down on their April 4 tariff plans.

Yield on 10-Yr US Treasury Bond: +10 bps to 4.19%
NASDAQ Composite Index: +5% to 15,603

April 9 — With China refusing to blink, the US raised its tariffs on Chinese goods to 104% (!!!), and China promptly raised their tariffs on US goods to 84%. But…then the US announced that the implementation of the “discounted reciprocal” tariffs from April 2 would be delayed by 90 days (for all countries except China) to give time for these countries to negotiate “deals”.

Yield on 10-Yr US Treasury Bond:+7 bps to 4.37%
NASDAQ Composite Index: +11% to 17,001

After all that, the NASDAQ Composite Index is now only 3.5% below where it was at the end of the day on April 2 (pre-tariffs). However, the yield on the 10-year US treasury is 38 basis points higher and average mortgage rates are (once again) at 7%! [MBS Highway, Bloomberg]

Mortgage Market

We just can’t manage to keep mortgage rates lower for very long. Something always happens. In this case, it looks like a combination of the risk-off trade (selling stocks to buy bonds, pushing yields lower) reversing & liquidity squeeze prompting investors to sell US treasuries. To be honest, I don’t know. But I was looking forward to a spring selling season with mortgage rates near 6.5% and now we’re at 7.0% again. Sigh.

Here’s what the Fed Funds Rate futures market is currently pricing in for rate cuts. Note that the current Fed Funds Rate policy range is 4.25–4.50%.

• May 7 FOMC Meeting:

• 78% probability that the policy rate will remain at 4.25–4.50% (down from 88% last week)!
• 22% probability of a 25 bps cut (25 bps = 0.25% = a quarter percentage point) to 4.00–4.25%.

• June 18 FOMC Meeting:

• 17% probability that the policy rate will remain at 4.25–4.50% (down big from 34% last week).
• 66% probability that the policy rate will be 25 bps below current (which implies one rate cut on either May 7 or June 18).
• 17% probability that rates will be 50 bps below current

Inflation slowed sharply in March..CPI dropped significantly…and no one cared.

Any other week this sharp drop in inflation would have bond prices soaring and bond yields (and by extension, mortgage rates) falling. Any other time, such news would stoke optimism that Americans’ cost of living is no longer surging.

But This big improvement lands as countries, businesses, markets and consumers grapple with America’s most severe escalation of its tariff rate in more than a century.

March “Headline” CPI (Consumer Price Index) fell 0.1% MoM, +2.8% YoY → +2.4% YoY. “Core” CPI, meanwhile, rose only 0.1% MoM which allowed annual “core” CPI to drop from +3.1% YoY → 2.8% YoY.

Inventory springs forward

The spring selling season is upon us! The March 2025 update to the Realtor.com residential listing database was pretty encouraging. The number of active listings nationwide rose 5% month-over-month to 893,000 units (that’s +28% year-over-year). There is a lot more inventory for buyers to choose from – particularly in states like Texas and Florida where inventory levels are back to pre-pandemic levels. [Source: Realtor.com]

Staying at home?

In 2024, homebuyers surveyed by the National Association of Realtors said that they expected they would stay in their home a median of 15 years. Just a few years ago, that figure was 10 years! What’s changed? Higher home prices and mortgage rates have encouraged people to stay put, yes. But also: there were fewer younger buyers in 2024 (who tend to move homes more often). [Source: NAR]

As soon as mortgage rates come down, there will be a rush of younger, first-time buyers. This will naturally lead to more homes transitioning.

Thanks for tuning into my Mortgage & Housing Update. [source: List Reports]

🤩 I am a real estate professional, with an expertise in financing. Connect with me for a consultation and to get mortgage ready. I encourage you to get pre-approved.

Pauline Lee, Licensed MLO nmls# 674113 | pauline@indmortgage.com | (508) 525-5415 | https://www.indmortgage.com/mortgagehousingupdate20250411