How New Tariffs Are Affecting Mortgage-Backed Securities (MBS) — And Why That Matters to You

How Tariffs Affect Mortgage-Backed Securities

In April twenty twenty-five, new tariffs introduced by President Trump began shaking up the markets. While tariffs usually make headlines for their impact on goods like steel or electronics, they also cause ripple effects in areas most people don’t expect—like mortgage-backed securities, or MBS for short.

So what does that actually mean? Let’s break it down in a simple, no-jargon kind of way.

First, What Are Mortgage-Backed Securities?

Mortgage-backed securities are kind of like bundles of home loans that get sold to investors. Imagine thousands of mortgage payments getting grouped together, and then someone saying, “Hey, would you like to invest in these and earn a return every month as people pay their mortgages?” That’s what MBS are.

They’re popular with investors because they usually offer more stability than stocks. People tend to keep paying their mortgages even if the economy’s going through a rough patch, which makes these investments pretty solid.

How Do Tariffs Come Into Play?

Tariffs are basically taxes placed on goods coming into the U.S. When those go up, it often triggers worry and volatility in the stock market. Investors don’t like uncertainty, so they start pulling money out of stocks and looking for safer places to put it. That’s where MBS come in.

When demand for MBS goes up, their prices rise. That’s exactly what we’re seeing now—since the tariffs went into effect, the iShares MBS ETF (an exchange-traded fund that tracks mortgage-backed securities) rose nearly 0.9%, closing at $94.42. That’s a strong signal that people are seeking safety in the bond and MBS markets.

Lower Treasury Yields = Lower Mortgage Rates?

Here’s where it gets even more interesting. Tariffs often lead to lower yields on U.S. Treasuries—those are government bonds that are seen as the ultimate “safe haven” investment. When those yields drop, it usually means interest rates across the board start dipping.

And guess what one of the first things to follow suit is? Mortgage rates.

Lower mortgage rates make it cheaper to borrow money to buy a home, which can stimulate more activity in the housing market. So even though tariffs might cause some economic turbulence, they could also create an opportunity for homebuyers to lock in lower rates.

So, Who Benefits?

If you’re already a homeowner with a mortgage, this could be a great time to look at refinancing. If you’re thinking about buying, a dip in rates could give you more purchasing power. And if you're an investor, MBS might be looking a little more attractive right now, especially with the stock market facing more ups and downs.

But... Don’t Get Too Comfortable

It's worth mentioning that this shift may not last forever. The market is still digesting what these tariffs mean long-term. If inflation starts to rise or if economic growth slows too much, that could change the game for both MBS and mortgage rates. That’s why staying informed—and flexible—is key.

PNW High-Vibe Mortgage Lender