April Mortgage Outlook: Tariff Jitters Sway Rates
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Mortgage rates might rise modestly in April as businesses and consumers brace for higher tariffs on imports.
Every mortgage rate forecast risks being wrong. What’s distinctive this April is uncertainty over tariffs and their effect on the economy.
"Given tariffs have the potential to both reignite inflation and depress economic growth, predicting mortgage rates is especially tough right now," said Kara Ng, senior economist for Zillow.
Higher tariffs could raise inflation
As this mortgage forecast was being written in late March, the Trump administration was planning to impose higher tariffs beginning April 2 on imports from the country's biggest trading partners. But which countries? Which products? The administration declined to give details.
You're stuck with deciding whether to buy a house, or lock a mortgage rate, with incomplete information about government policy.
The only certainty is that higher tariffs, if imposed, would eventually be passed on as higher prices to U.S. businesses and consumers. All forecasters have "tariff inflation" baked into their inflation predictions for 2025 "without exception," Federal Reserve Chair Jerome Powell said in a news conference after the March 18-19 monetary policy meeting.
Economists for Fitch Ratings (a bond-rating firm) were more blunt. "The new U.S. administration has started a global trade war that will reduce U.S. and world growth, push up U.S. inflation and delay Federal Reserve rate cuts," its economists wrote in a commentary.
The link between inflation and mortgage rates
Fitch estimated in its March 18 commentary that "the tariff shock" will add one percentage point to the inflation rate. That would be a significant backward step — to a rate we saw in September 2023, to be specific.
The Federal Reserve's goal is to maintain an inflation rate of 2% in its favored measurement, called the core Personal Consumption Expenditures Price Index. That inflation rate topped out at 5.6% two-and-a-half years ago and has been trending downward since then. It passed through 3.7% in September 2023, fell to 2.8% in the most recent reading for February, and is expected to have dipped to 2.7% in March.
Mortgage rates have fallen along with inflation. The 30-year mortgage averaged 7.2% in September 2023, according to Freddie Mac, and 6.65% in March 2025.
If the inflation rate bounces up because of tariffs, mortgage rates could bounce higher, too.
Uncertainty is high, though
If higher tariffs end up causing mortgage rates to rise, the increase may not happen immediately. That's one reason this forecast is made cautiously.
Another reason for doubt: Tariffs might have pushed mortgage rates higher already. Lenders have long known of the probability of higher tariffs. "It's been baked into mortgage rates for months now," says Chen Zhao, head of economics for Redfin.
She points out that mortgage rates have risen since September, when polls reflected a strong chance that Donald Trump could be elected again. Rates peaked the week of the inauguration.
If the administration raises tariffs on more products than expected, then mortgage rates could rise eventually. But if a lot of nations or products are exempted from higher tariffs, "it's possible that rates could even fall a little bit," Zhao says.
Don't let unpredictability stop you from buying
Going into spring and summer homebuying season, it would be awesome if mortgage rates were lower and economic policy were more predictable. But mortgage rates are north of 6.5% and tariff plans shift frequently.
So the advice is to act when it's a good time to buy or sell for you personally, and to avoid timing such a momentous decision on predictions about the direction of mortgage rates.
"Home buyers should be looking for low mortgage rate windows where temporary opportunities arise, not waiting for a sustained drop to move forward," said Ng, adding that Zillow expects mortgage rates to remain in the neighborhood of 6.5% for the rest of the year.
What other forecasters predict
The 30-year mortgage rate averaged 6.8% in the first three months of 2025 in Freddie Mac's weekly survey. The Mortgage Bankers Association and mortgage securitizer Fannie Mae both predict that the 30-year mortgage will drop below 6.5% by the first three months of 2026. Fannie Mae predicts a steeper decline than the MBA does.
What I predicted for March and what happened
At the end of February I wrote that mortgage rates "might remain level for the first two-thirds of March. But they could rise after March 19, when the Federal Reserve's rate-setting meeting ends." This prediction did not pan out.
Instead of remaining level in the first two-thirds of the month, mortgage rates moved around: first down, then up. The average mortgage rate was lower in March than in February.
