Mathew Graham, CEO of Mortgage Daily News, thinks that, according to CNBC, yes, the trade war will be good for housing. “Lenders will be re-pricing for the better. The resulting rate sheets will put us right in line with the lowest rates in more than a year.”
Graham also believes that the more “qualified the buyer,” ie., the more top tier/wealthy the buyer, the lower the mortgage interest rate could be. Lower than 4%? Perhaps, according to Graham.
“The bigger news is that this (the upshot from the trade war with China) could prove to be an inflection point for the broader rate market and even the economy that could result in even lower rates.”
As you agents and brokers know better than most, homebuyers are extremely sensitive to interest rate moves. Jus one half a percentage point move can swing $100/month more or less on a $300,000 mortgage. “Low rates helped fuel the surge in home prices over the last four years but those gains are shrinking since last summer when rates began rising. If rates fall to new lows, and stay there for a while, home prices could turn higher again.”
Others disagree with Graham’s vies that the trade war will be good for housing. According the International Monetary Fund (IMF) experts, “consumers are paying the added costs from the tariffs. Products are now 2% more.
Executives at Target, Home Depot, Wal-Mart, Kohl’s and Macy’s agree with the IMF. Brett Biggs, CRO with Wal-Mart, said, “Increased tariffs will lead to increased prices, we believe, for our customers.”
Makes sense, doesn’t it. Higher consumer prices lead to higher inflation. Higher inflation leads to higher mortgage rates. And higher mortgage rates lead to higher monthly mortgage rates that lead to fewer home sales and/or sales on less expensive houses.