Mortgage rates in the United States have fallen below 6% for the first time since 2022, marking a significant milestone for prospective homebuyers. The average rate on a 30-year fixed mortgage dropped to 5.99% on Monday, according to the Mortgage News Daily Rate Index. However, the decline stems from renewed market anxiety rather than the economic conditions President Donald Trump has been advocating for.
The drop in mortgage rates follows a recent decrease in Treasury yields, driven primarily by investor concerns about escalating trade tensions. The yield on the 10-year US Treasury note declined five basis points on Monday alone, reflecting a flight to safety among investors spooked by fresh tariff announcements.
Trade War Concerns Drive Mortgage Rates Lower
The decrease in borrowing costs comes amid heightened uncertainty following the Supreme Court’s decision to strike down most of Trump’s tariffs. In response, the president announced plans to implement a new 15% global tariff over the weekend, reigniting fears about international trade conflicts.
According to David Morrison, a senior market analyst at Trade Nation, investors are seeking safe haven assets amid a new combination of market worries. This risk-off sentiment has pushed investors toward traditionally stable investments like US Treasury bonds and gold, which has risen approximately 4% over the past five days.
Treasury Yields Reach Concerning Levels
The 10-year Treasury yield has plummeted to its lowest levels so far this year. Nicholas Colas, co-founder of DataTrek Research, noted that yields are now approaching their April 2025 lows, which occurred around the time Trump’s “Liberation Day” tariffs triggered widespread investor panic and a historic market sell-off.
JPMorgan indicated on Monday that the risk-off movement has contributed to yield volatility. The financial institution’s analysis suggests that market participants are responding to multiple simultaneous concerns, including the proposed universal tariff and recent weakness in technology stocks driven by artificial intelligence sector concerns.
Implications for Housing Affordability
While lower mortgage rates could provide relief for homebuyers and align with Trump’s stated affordability goals, the underlying cause presents a contradiction. Instead of reflecting investor confidence in lower interest rates and economic stability, the rate decline signals market distress and uncertainty about future economic conditions.
The disconnect between the administration’s desired outcomes and current market dynamics highlights the complex relationship between trade policy and financial markets. Additionally, the concurrent rise in safe-haven assets suggests investors are positioning defensively rather than optimistically about economic prospects.
Market observers will be watching closely to see whether mortgage rates remain below the 6% threshold in coming weeks, as uncertainty surrounding the implementation timeline and specific details of the proposed 15% global tariff continues to evolve. The trajectory of Treasury yields and broader market sentiment will likely determine whether these favorable borrowing conditions persist for potential homebuyers.
