Investors were hoping that Federal Reserve (the central bank of the United States) chair Jerome Powell would calm nerves at an event on Friday. However, Chair Powell said that the economic impact of tariffs was likely to be larger than expected, adding that the Fed was in no hurry to act on interest rates and would wait and see how events play out. What does it all mean for Orion’s brokers and your borrowers?

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Tariffs are slamming the financial markets, both stocks and bonds. It is generally believed that mortgage rates won't fall as hard. In fact, rates for home loans dropped slightly, but may not go much lower as uncertainty from Washington shrouds the housing market. Still, at Orion they are down well into the 6 percent range for most 30-year mortgages for borrowers with good credit.

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Mortgage rates have bounced within a narrow range since the start of the year even as U.S. bond yields have tumbled. The 30-year fixed-rate mortgage has long moved alongside the 10-year Treasury note, since fixed-income investors see the two as roughly similar.

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Brokers often explain to borrowers that if a financial product is seen as riskier, whether it is a stock or bond, the issuer must pay more (a higher rate) to attract an investor. Anxiety about Washington policy has led investors to sell riskier assets, like stocks, and buy those seen as less risky, like bonds. But most housing insiders don't expect mortgage rates to fall as far because of the uncertainty and volatility in the market. Despite expectations of rate cuts later this year, the Fed's stance remains cautious, even restrictive. In fact, mortgage rates are most likely to go lower when the economy is weak enough that many people won't want to, or won't be able to, buy homes because of affordability issues. But our brokers know that for homeowners looking to refinance, there are opportunities.

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Recessions bring economic problems, but they can improve buying power for well-qualified borrowers, potentially opening doors at Orion that were previously out of reach. Tighter credit conditions and job market instability may widen the gap between those ready to buy and those pushed to the sidelines. But as noted above, it is a fine time to refinance, so please talk to an Orion AE about our programs to suit your borrower’s needs at a very competitive price!

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