MW Mortgage rates are plunging. Here's the 'smartest play' that house hunters can make now.

By Aarthi Swaminathan

Is now a good time to buy a house? That's a key question as mortgage rates fall.

Mortgage rates are plunging as financial markets digest President Donald Trump's sweeping, worldwide tariffs.

That's leading some prospective home buyers to wonder if they should act now that borrowing costs are finally coming down.

Their decision comes at a complicated time. Tariffs are expected to raise consumer prices, and some people are speeding up purchases of big-ticket items such as cars.

But for house hunters whose heads are being turned by lower mortgage rates, the window of opportunity comes as predictions of a recession are mounting and a sliding stock market is eating into investment wealth.

While home buyers decide their next steps amid uncertainty, there's one concrete move they can make to take advantage of this moment, experts say: This could be a good time for home buyers to lock a rate in with their mortgage lender.

The 30-year fixed-rate mortgage drops 20 basis points in 2 days

The average rate for the 30-year mortgage fell 12 basis points on Thursday after the markets digested Trump's tariffs, and a further 8 basis points on Friday, to 6.55%, according to Mortgage News Daily.

Investors are flocking to the 10-year Treasury note BX:TMUBMUSD10Y, which is seen as a risk-free asset. That's pushing 10-year yields down, which in turn is bringing the 30-year fixed-rate mortgage down, because both move in tandem.

Rates fell on Friday due in part to retaliatory tariffs from China, which caused stocks to slide further, noted Chen Zhao, the economics research lead at real-estate brokerage Redfin $(RDFN)$.

In a note on Friday morning, Zhao said she expected mortgage rates to come down, at least temporarily. While Friday's jobs report was stronger than expected, investors would see that data as "old news," Zhao said, "because the fallout from Trump's April 2 tariff announcement is much more significant."

The drop in the 30-year mortgage rate is "one of the most significant weekly declines we've seen in a while, and it's a window of opportunity for anyone actively in the market," Vishal Garg, chief executive of Better $(BETR)$, an online mortgage lender, told MarketWatch.

But Redfin's Zhao noted that "much uncertainty and volatility lies ahead."

"The future for mortgage rates depends on whether the inflationary or the recessionary effects of tariffs dominate, and how the Fed chooses to respond," she said.

Bess Freedman, chief executive of Brown Harris Stevens, a real-estate company, said that the Federal Reserve will "most likely have to cut" rates based on how the economy is slowing. While mortgage rates don't directly follow the direction of the Fed's benchmark interest rate, a cut by the Fed "could result in lower mortgage rates at some point down the line," she said.

So what's the best move for home buyers now that rates are falling? Should they jump in to buy a house now?

One of the 'smartest plays' now that mortgage rates are falling

Before going house hunting, the better move could be to lock in the current mortgage rate, experts suggested.

"Locking in a rate now is one of the smartest plays," Better.com's Garg said. "It protects you from any sudden reversals and positions you to act quickly, whether you're buying or refinancing."

Alex Elezaj, chief strategy officer at United Wholesale Mortgage $(UWMC)$ - the biggest mortgage lender in the U.S., according to Bankrate - also suggested house hunters lock in a rate now.

"Lock periods vary from lender to lender. At UWM, our average closing time is 16 days, so there's not as much demand for longer lock periods ... [but] we do allow our broker partners to customize the length of their lock periods between eight and 90 days," he said.

"We also have options that allow locks up to 365 days based on the product type," Elezaj added.

Better.com offers a lock-in ranging from 30 to 60 days. Some loan types come with a rate lock-in of up to 75 days, Garg said.

UWM's Elezaj suggested that people looking to take on a mortgage call their broker and discuss what options are available at the moment.

"The mortgage market is very cyclical so it's hard to predict what will happen next with rates," he said. "My biggest piece of advice is don't try to time the market."

Look at down-payment assistance programs

Another move for home buyers is to look at down-payment assistance programs in their city.

As MarketWatch reported previously, some cities offer considerable assistance in the form of a second mortgage to home buyers who earn below a certain income level.

Read more: A crisis-era mortgage strategy is making a comeback - and this time it's bailing out buyers

In Memphis, Jennifer Hart manages the program for the City of Memphis Division of Housing and Community Development.

The program provides assistance of up to $25,000 to help buyers who qualify under certain criteria, which include where they buy, how much they buy a house for and how long they live in it, Hart said.

The loans are originated by the city. Hart said that buyers would need to purchase a property within the city limits of Memphis, where homes cost typically around $350,000.

For a family of four, they would qualify for certain programs that offer down-payment assistance if they make a yearly income of $136,300 or less. A single person can earn up to $115,900 per year and still qualify for the program. The amount they get will vary based on their individual circumstances.

The program is "always in high demand," Hart told MarketWatch. "It's just hard to save $25,000."

And right now, "people are not shying away" from buying homes, she added.

"It's always a good time to buy a house ... if you have a job, had a plan, and you've saved and done all of the necessary things," Hart said, as opposed to paying rent and not building equity.

-Aarthi Swaminathan

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April 04, 2025 15:10 ET (19:10 GMT)

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