On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about how tariffs are affecting housing, specifically mortgage rates.
Related to this episode:
Tariff news sends mortgage rates to the lowest level of 2025 | HousingWire
https://www.housingwire.com/articles/tariff-news-sends-mortgage-rates-to-the-lowest-level-of-2025/
Enjoy the episode!
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
Related to this episode:
Tariff news sends mortgage rates to the lowest level of 2025 | HousingWire
https://www.housingwire.com/articles/tariff-news-sends-mortgage-rates-to-the-lowest-level-of-2025/
Enjoy the episode!
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Welcome, everyone.
00:06My guest today is Lead Analyst Logan Motoshami to talk about how the wild tariff news from
00:11this week will affect housing, specifically mortgage rates.
00:15Logan, welcome back to the podcast.
00:18Wow.
00:19Just wow, wow, wow.
00:22You called me last night and you're like, why do you sound so calm?
00:28This is after the tariff news, after we got the tariff news.
00:32We have a lot to talk about, but first let's go back to the Tracker article where we said,
00:40can mortgage rates go lower?
00:42And we said that that key technical level with the bond market has been very sturdy.
00:49It's held up with a lot of negative news.
00:52And originally when the first tariff news, like 10% across came, bond yields went up.
00:59Stock futures went up.
01:01We would not be having this conversation today if that was the case, if there was just 10%
01:06tariffs on everyone.
01:08But the reciprocal tariffs and how they calculated at, for all my nerdy friends who know what
01:15I'm talking about, that was absolutely gold.
01:17In any case, that was so extreme that initially the bond market just tanked and it fell throughout
01:25the day.
01:26And then now the stock market where it's Thursday morning right now.
01:30And this is all happening with the labor data this week has been fine.
01:35I mean, job openings, nothing spectacular there.
01:38ADP data, beat estimates, jobless claims fell.
01:43There's nothing on that side, but because the tariff news and some ISM orders came in
01:48week and everything looking out forward, bond yields just cracked through that.
01:52Stocks are selling off on that.
01:54So we were able to break it through forward looking kind of guidance on what could possibly
01:59happen with the economy, brought mortgage rates to the lowest levels of the year.
02:04And we always focus on housing here.
02:07So before all that happened, purchase application data, again, positive.
02:16And our spring data line for the first time now going into April has had positive year
02:22to date data, has that positive year over year data, and it's kind of picking up.
02:27And now today is the first day that we've gone below 6.64% if you're using Matt's Mortgage
02:34Daily, it's at 6.63.
02:36The spreads were bad today, but the move was such a violent move that rates went lower.
02:42And if mortgage rates just head towards 6%, what have we said, Sarah, from the start of
02:47the year?
02:48Yep, demand will pick up.
02:49Everyone's forecast is wrong.
02:50Nobody's really talking about the purchase application data.
02:54I think there's a lot of people who are just, they'd rather talk about one house in Florida
03:00that was bought in 2022 that is down 30% instead of focusing on the economics.
03:07So let's talk about those tariffs.
03:09So were you surprised?
03:11I think everyone was kind of like, what's the strategy behind this?
03:14And how does this fit into your whole, it depends on the trade war tap dance, and is
03:18he really going to do it?
03:19And like, give us your take on that.
03:22So when we did that November 7th podcast, we said, okay, listen, this is not going to
03:27work with higher mortgage rates, and you're not going to go into this trade war right
03:32away.
03:33So you're going to see a lot of tariff ons, tariff off.
03:36But the last six weeks we've said, this is kind of not working.
03:40You can't sit here and just do this back and forth thing.
03:43You're going to have to pull the trigger.
03:46This is my like observation take.
03:48When I first looked at that chart, I mean, I laughed.
03:52I said, this is funny.
03:55And my second take was, imagine what we talked about in the last podcast.
04:02Imagine like you need to make a decision, and you kind of don't know what to do.
04:07Do you try to just go back and forth with countries?
04:10No.
04:11I mean, obviously that's not working for the White House.
04:15But what if you went full blitz mode, right?
04:20And a lot of people might disagree with my take here.
04:22What if you went with a full, listen, you guys can't handle this stuff.
04:28Our labor market isn't broken yet, but I can go full blitz and force you to make deals.
04:34Now, there are people out there in the White House that said, there's no deals are going
04:37to be done.
04:38And then like 20 minutes later, somebody from the White House, yes, there's going to be
04:41deals done.
04:42If you look at it in this light, and this is how I explained it on Twitter today, because
04:47there are actually people who said, why isn't the bond yields much lower today?
04:50Why aren't stocks selling off even more?
04:54The jobless claims data hasn't broken yet, right?
04:58If jobless claims were running at 300,000, we wouldn't be doing this.
05:03You have a little bit of time before, you know, these tariffs, the longer this stuff
05:09goes in, the more problematic it gets for the economy.
05:12But imagine for the next nine to 12 weeks, or even shorter than that, you start to get
05:19something that's workable.
05:21Because if you really believed in this as the policy, you would have done this on day
05:25one.
05:26Or if you really believe, like to me, if you really believe that you want to change the
05:31entire structure of the US economy, you have to kind of like slowly move this in and get
05:36people prepared.
05:37Why?
05:38Two year political cycles.
05:42So what happened is the Senate Republicans kind of fought back on Trump on tariffs on
05:47Canada, but the House didn't.
05:50Imagine an economy dealing with this for two years, then the two year political cycle,
05:55Congress comes up.
05:57It's very difficult to kind of think long term in a democracy.
06:02If you're a dictator and you don't have to worry about reelections or Congress, you can
06:06do whatever you want.
06:07And this is why dictator economies aren't that good.
06:10But here, imagine you just have a little bit of window before the labor data starts to
06:15get hit.
06:16And then you go for it, right?
06:18You force people to make deals because the strategy back and forth, the I don't know,
06:23is it fentanyl?
06:24Is it trade deficit?
06:25Is it manufacturing jobs?
06:27Do you want the dollar weaker to sell?
06:29But one of the quiet things that I saw in the last 48 hours is that Europe was planning
06:37on not buying like US weapons or something from us.
06:43And a trade war, the problem with the trade war is countries do this, countries do that,
06:47countries are not going to buy this, we're not going to travel here.
06:49It's not the most efficient way.
06:52And you need time and kind of a slow process.
06:54So the fact that it was so aggressive, it just took out that card to me and that we
07:00are trying to not bluff your way out of it, but force your way into getting some deals.
07:06Now, if I'm wrong about this, then this stays forever.
07:12No matter what happens to the economy, I'm going to take the other side on that bet.
07:18Because two-year political cycles, it's difficult to do something like this when you do it fast.
07:23If you try to do something timed and measured, you know, the White House's own tariff guy
07:29said, you know, you have to like slowly get tariffs into the process so they don't become
07:35damaging to the economy.
07:37We're already talking about farmer bailouts now, you know, if we're going to be rich or
07:43something, you know, so there's these things that the way it was done and the calculations,
07:49it just seems like to me, hey, let's just go for it and then see.
07:52And if I'm wrong, then this never changes.
07:56And in a sense, it'll be better for housing because, you know, you're going to get some
08:01economic weakness happening over the next 12 months that should push lower rates.
08:06The counter to that is, well, they're already estimating 3%, 4%, 5% inflation rates because
08:12of the scale.
08:13We're not talking about 2018 anymore in small product.
08:15We're talking scale everywhere.
08:18So it becomes a tug of war on this.
08:20But yeah, it just, Sarah, it gets more interesting.
08:27And we talked about this in the last podcast.
08:30He's got to do something.
08:31So what is he?
08:32Does he do something that he doesn't really want to go into?
08:36Or does he have something kind of in the middle?
08:39And I thought the 10% tariff thing was going to be one of those things that it's not that
08:44detrimental to the economy and bond yields and rates or bond yields would have gone up.
08:49Stocks would have gone up.
08:50But here, this is like guns of Navarone.
08:52This is like a thing that you've got a lot of people more concerned going out in the
08:58future.
08:59Okay.
09:00So you wrote an article today on this very subject that like the tariffs had dropped
09:0610-year yield and mortgage rates.
09:08So for housing, when we look at this in terms of housing, there's a couple of things.
09:12So you have mortgage rates on this side.
09:14Then if you have just instability, volatility in people's stocks, whatever, it can make
09:20them feel like I should just hold, correct?
09:23I do not believe in that concept for this reason.
09:28Over the last 14 years, whenever rates fell, demand picked up.
09:36Whether it was COVID, whether it was here, I mean, think about this and this rationality.
09:43We've had a lot of crazy headlines, November, December, January, February, right?
09:47Majority of this time, purchase application date is positive with elevated rates.
09:54Sarah Wheeler, elevated rates.
09:55We're not talking 3% mortgage rates or 4% mortgage rates because that low, people are
10:00going, hey, I got to go in.
10:03But with elevated rates, purchase application date is positive.
10:06It actually had a positive curve in November and December.
10:09Okay, that's seasonality.
10:10I'm willing to take that.
10:12But this January, February, March, for it to be positive with elevated rates, no, obviously
10:21people are like, we're going with it because why?
10:26Housing is one of these things that every single year people need, right?
10:30It's the affordability.
10:32But if there was a period of time in history, COVID, crazy, right?
10:38Are we going to die?
10:39Behavior, everyone stopped doing it.
10:41Oh my God, let's go back, 3% mortgage rates.
10:43Here, November, December, January, February, March, crazy headlines.
10:49So far, purchase application date is positive.
10:51Now the counter to me is, well, the negative impacts have not happened yet and everybody's
10:56talking about a recession.
10:58And I said, okay, well, then we have to go there.
11:01A stock trader came to me and a lot of people are saying that, well, nobody will have jobs
11:06and money.
11:07It's 162 million people working.
11:10What happened with COVID?
11:12Everybody fought me on COVID because they said, Logan, 30 million people are unemployed.
11:17I said, you forgot 5 million in forbearance, 35 million off the grid.
11:23How do you think more?
11:24My army is bigger than yours.
11:27I got 133 million people here.
11:29They're armed to the teeth.
11:31They'll take your 35 million every time and win.
11:35Now back then, affordability was better.
11:37Mortgage rates were better.
11:38But in this case, what we're talking about is how do we adjust to the realities of a
11:45trade war tap dance that could hit the economy, but it pushes rates down lower.
11:50The question is, do rates go even lower if the inflation data picks up?
11:56Now this is different because the standard answer would be, well, there's no way a negative
12:03economic curve will disinflationary.
12:06Inflation won't be able to stick up because the economy will, people will pull back on
12:12spending with everything that.
12:14That's the counter to the inflation argument.
12:16Then the other argument is, well, guess what?
12:19Household formation, household balance sheets, all these things are good.
12:22People still need to consume goods.
12:23They'll take the higher cost.
12:26That's the tug of war that we don't know yet.
12:30I see both sides.
12:31Both sides are valid out here.
12:34Now the original process was, well, inflation is going to take off.
12:39Rates are going to take off.
12:41I thought, well, you're really bullish on the economy then because that typically doesn't
12:48happen unless people can consume goods and services out there.
12:52We saw that during COVID.
12:54During COVID, even with the growth rate of inflation, consumption data was fine, but
12:58now with elevated rates, it could be a little bit more problematic on that side.
13:06Both teams have valid points now and we're going to have to see what happens over the
13:11next 12 months on this because this is just day one of this.
13:17I still think this looks like a full-blown blitz to get some deals.
13:23They could have gone full 100% tariffs reciprocal on people.
13:27They went half and they even talked about maybe there was ways that people can lower
13:32their thing.
13:33I think one of the things is you have so many different people from the White House saying
13:37different things that it confuses people.
13:39Again, everyone get on the same page and then we'll take it one day at a time.
13:45For everyone that's listening, that's mortgage and real estate, purchase application data
13:49was positive before rates broke here and traditionally over the last two years, they
13:54tend to get better when rates go from 6.63 down to 6, but it's also now we're in spring
14:02and so much different this year than last year.
14:05Last year, 6.63 to 7.5, 14 negative prints, only two positive, only two flats, zero year-over-year
14:14growth.
14:15Last year, six positive, three negative, three flats, majority of the year is year-over-year
14:19growth and now rates are going lower to a level.
14:23Much different backdrop.
14:24It's very exciting and very invigorating and we'll take it.
14:31One of the things that I always see on social is people are like, they listen to you so
14:36that they can then translate that for their consumers, for their clients and be like,
14:42here's how you should be interpreting this and here's why it might still be a good time
14:46to buy a home if you need a home.
14:49If you're in that position right now, you're back as an LO, which you were for many years,
14:54what are you telling people?
14:55Sara, ask me.
14:56No, I'm not going to ask you.
14:57Ask me, Sara.
14:58No.
14:59Sara, ask me if you should buy a house.
15:00That's not the question I want you to answer.
15:01I know, but you asked me, my LO self.
15:07Our family has been in banking since the late 1950s.
15:10We've seen a lot of economic cycles, but one thing is constant.
15:14Millions and millions of people buy homes every single year.
15:17They're ready because the process takes usually a year to go into it.
15:21You're actually thinking, okay, we're going into that.
15:26Are there marginal home buyers that need to be convinced?
15:29Your job is not to convince people.
15:31Your job is to basically get your client, if you're a realtor, get them to a loan officer,
15:36have them pre-qualified as soon as possible.
15:38This is their payment.
15:39There it is.
15:40And then you show them where it is.
15:42Prices are going up.
15:43Prices are going down.
15:44Payments, HOA, insurance.
15:45Get them focused on that total payment.
15:47And then you're not wasting your time on somebody who's like, I don't know if I should buy a
15:53house.
15:54There's a lot of those, but they're not serious people.
15:57The serious people are the people already filling out the purchase application data
16:00this year, even with elevator rates, because you've got to buy.
16:03I mean, this thing doesn't go to zero.
16:05Home sales don't go to zero.
16:06We're going to be near 5 million home sales again this year.
16:10Total home sales, just like the last two years.
16:13Focus your energy on serious people.
16:15But if you're asking me, and I've always said this, if somebody asked me, should I buy a
16:20house?
16:21I will tell them no, because you're not ready.
16:24Because millions of people are buying homes every year.
16:27They're ready.
16:29You go get yourself a loan officer, find the total payment.
16:32If that payment works for you, be part of society.
16:35If you're asking me, no, I don't think you're emotionally ready, I don't think you're financially
16:39ready, because you're asking me.
16:41You should not be asking me this.
16:43It's like those people on YouTube.
16:47Do you guys realize the people on YouTube have said prices are going to fall for five
16:51years in a row?
16:53And now they're going, FHA, FHA.
16:58Oh, I still can't.
16:59I'm still not over that multifamily.
17:01Oh my God, Sarah.
17:03I have a whole list of people that I want to debate, in which we're going to have one
17:07of those debates next week.
17:10But there is a whole list of people that need to be just regulated and checked.
17:15But if you're talking about clients, man, listen, get them to a loan, get the payment
17:18and go.
17:20Because you need to spend your energy on people that are serious.
17:24So far, even with the crazy headlines, purchase application is positive.
17:29I'm just going to go with the aggregate data out here.
17:34But again, what's housing?
17:36It's a fixed debt cost.
17:39Wages rise, property taxes rise, insurance rise.
17:42But get yourself as informed with the total payment level.
17:45And again, everybody's situation is different.
17:49Some people have jobs that they're not sure about.
17:53Some people are very secure.
17:55But get them into the program as soon as possible in terms of what the payment level is and
17:59go.
18:00If they're not ready, they're not ready.
18:02But don't get into the, I need to convince you stage.
18:06That's not anyone's job.
18:08That's the person who's buying the house.
18:10They should not have a problem with that total payment because you're staying there for a
18:14long time.
18:16And that's the way it goes.
18:17I'm not a big believer of...
18:21That's why I have that answer every time when people ask me, should I buy a house?
18:25No, you're so not ready.
18:26I wouldn't even have you go get me a glass of milk from the refrigerator, let alone buy
18:32a house.
18:33Okay.
18:34Okay.
18:35Let's talk about, you mentioned recession earlier.
18:39I know we don't know what's happening with jobs that we're recording this on Thursday.
18:43We won't know what the jobs report is.
18:45But when you look at what you are, your recession model, what does that look like right now?
18:51Are you on recession watch?
18:53What are you looking at?
18:54The labor triggers have not happened yet.
18:56So until the labor triggers happen, I don't want to even go there because I don't want
19:04to be like every terrible person on Twitter and YouTube that keeps on saying recession,
19:08recession, and then 14 years.
19:09Because I just, I physically just, again, I would swallow my own vomit.
19:15If I was that bad, if I woke up every single day being that bad and then thinking to myself,
19:20I look in the mirror and go, my God, you're so amazing.
19:24These people don't realize the Fed's balance sheets.
19:26Everything is fake.
19:27Manipulation.
19:28I don't want.
19:29I live once.
19:30I want to be happy.
19:31Smile.
19:32I want to show off this hair.
19:34I want to go out and teach economics.
19:36I don't want to be them.
19:38Because that's the devil's work, right?
19:42Every day.
19:43Recession.
19:44No.
19:45When the labor triggers start to go off, we can go there.
19:48So far, residential hasn't.
19:50That's not looking great.
19:51Manufacturing.
19:52Oh, that's not looking good.
19:54These are labor triggers that happen with every economic cycle.
19:58So we're mindful of this.
19:59And like this week, I would tell you this.
20:01If we didn't have any tariff discussion this week, everybody like, oh, the labor data is
20:06okay.
20:07Bond yields would be like probably at 435 right now, the 10-year yield.
20:12But we took a different route on the tariff thing.
20:16So we'll see what happens.
20:19But again, the game's changed now.
20:22Going out in the future is the thing.
20:25What's going to happen?
20:26The past is the past.
20:27Now, we have to look.
20:28Because we now incorporated another variable.
20:32Whether they stick with it or not, time will tell.
20:36But we incorporated another variable that was not in the equation at the start of the
20:41year.
20:42It's kind of like in 2023, when the spreads got worse, we would not have had 8% mortgage
20:47rates.
20:49The spreads didn't get bad after the Silicon Valley.
20:51That was a Silicon Valley banking crisis event, and the spreads got bad.
20:55That was a new variable.
20:56So it added half a percent to the mortgage rate on that year.
21:01Here, now we could go on and see how it is.
21:03Now, of course, maybe two weeks from now, things are changing.
21:06But until then, for housing, 10-year yield fell.
21:12Because again, if the economic data is getting weaker, traditionally bond yields fall.
21:17By the way, for all the people that are still saying, mortgage rates can't fall because
21:21the mortgage-backed securities, they're flowing.
21:24Guys, rates fell from 8% to 6%.
21:29Mortgage rates can't fall because America's broke.
21:31Nobody's going to buy our 10-year yield.
21:33Guys, 8% to 6%.
21:35Come on.
21:36Let that go.
21:39That's not a thing.
21:40We are the most wealthiest.
21:42Forget about the $190 trillion of financial assets.
21:45You can put the U.S. in together, the land and everything.
21:48It's like $300-400 trillion.
21:49My God.
21:50Stop thinking we're a third-world country.
21:52What was it?
21:53The island of McDonald's?
21:54Or what was that?
21:55Where the penguins are?
21:56We have a 10% tariff on penguins because they're ripping us off.
22:01Those penguins, man, who even knew?
22:03They were our enemies.
22:04We didn't even know it.
22:05They're crafty.
22:06So yeah.
22:07Again, economic data for now.
22:09If it gets weaker, bond yields fall.
22:11We know this.
22:12Now, if the growth rate of inflation is higher and the Fed gets a little bit more aggressive,
22:16that's where the trick is.
22:18Unfortunately, Sarah, I think this is going to be the case.
22:23I think in the minds of all of us that watch the market, we don't actually believe that
22:31a sitting president would go after the Federal Reserve and start firing board members.
22:37But with everything that's been going on, I think Powell and them are in risk.
22:46Because knowing Powell and them, they're going to take it slow and they're not going to be
22:49proactive.
22:50And we could see what's happening.
22:52The whole thing was wrong.
22:53I mean, the game plan actually worked.
22:55They talked about lower rates and we brought this up and here it is.
22:59But the counter to this is if Powell takes a more hawkish tuck, I would not be surprised
23:05if they find there's like verbiage in old paperwork that maybe people can interpret
23:11it that you can fire the Federal Reserve and board members and get people in that are on
23:16your team.
23:17That's something I hope that does not happen.
23:20But if this prolongs, right now, one of the things is they wanted lower mortgage rates
23:26to get housing up, lower mortgage rates has already boosted housing just a little bit.
23:31That could be something going out in the future.
23:32I don't know how the markets would react to that, but that is definitely in play considering
23:38everything else.
23:39Well, that's notable that you say that because I've been bringing these things up for months
23:44and you're like, no, no.
23:46Because you take a very moderate stance and you're like, I don't think that's what's going
23:51to happen.
23:52So I think it's notable that you're like, if they need to cover the tariffs with lower
23:56rates, then maybe they feel like they have to do that.
24:00When I went on CNBC and the headline was The Cure for Tariffs is Lower Rates, you could
24:05see what's happening.
24:06There's one sector of the economy that's kind of looking better, right?
24:10Oddly enough, who had that bingo card by the end of March?
24:15It was the existing home sales market that's actually the outperformer just on the forward-looking
24:20demand curve.
24:21But here, the longer this tariff thing goes, the more I could see him try.
24:31I don't believe he can do this.
24:34I mean, I've read some of the stuff, but I could totally see him doing it now.
24:38And remember, Michelle Bowman, who was just promoted, she even said, well, I know I've
24:45been really stressed on inflation, but if the labor market gets weaker, we're going
24:49to focus on that.
24:50And I was like, oh, Nelly, the lady who's going to get a promotion is now labor over
24:55inflation.
24:56So, I don't know, there's a lot of pieces now that we just have to put in the mix.
25:02Logan, thank you so much.
25:05Super interesting episode.
25:07Good news on mortgage rates going lower.
25:09We'll see what happens tomorrow by the time this comes out.
25:11And of course, you'll be writing about it as it happens, so people can check back there.
25:16You have your hand on the pulse.
25:19And remember that Jobs Friday is today.
25:22This podcast will come maybe right when the report comes out.
25:26And always remember, residential construction workers, the whole model early on in the year
25:31was about if everything stays constant, the unemployment rate should rise.
25:36The Fed kept their unemployment rate targets low for something of a surprise.
25:40They already have raised that unemployment target once.
25:43The question now going out is, do they do this again?
25:47Because if they do this again and they have their dual mandate, do they say we need to
25:53be a little bit more dovish because these are aggressive tariffs?
25:59So that's the question mark now.
26:02What do they do?
26:05And I'm pretty sure Trump would be like, cut rates, cut rates, end the balance sheets,
26:10do QE, everything to kind of push rates because you could mitigate the damage to a degree
26:17until you figure what you want to do really with tariffs.
26:20Do you want to get deals or not deals?
26:23What do you keep saying?
26:24It's going to be an interesting four years.
26:26It's going to be every week, man.
26:29It's just since 2020, everything is just like, you know, but it's fun.
26:35I'm telling you, I love it.
26:37It is. I love this.
26:39I know that everyone's like, oh, everyone's stressed.
26:41But if you're if you're if you're looking at me, I'm ready to ball now, 24-7.
26:45Every day I get up and go, oh, yeah, let's go.
26:49I'm glad someone's having fun in the middle of this craziness.
26:52All right, Logan, thank you so much.
26:53Appreciate you.
26:54Pleasure.