MW Trump's Greenland threats are making it even more expensive to buy a house in America

By Aarthi Swaminathan

'For the housing market in general, reigniting the trade war risks another hit to consumers' pocketbooks,' one economist says

The jump in the 30-year mortgage rate reverses a downward slide that many home buyers and homeowners took advantage of in recent days.

The average 30-year mortgage rate jumped 14 basis points on Tuesday as financial markets assessed President Donald Trump's threats to impose tariffs on imports from European allies over his goal of acquiring Greenland.

The average 30-year fixed-rate mortgage jumped from 6.07% to 6.21% on Tuesday, according to Mortgage News Daily.

The increase in the 30-year rate followed an increase in the yield on the 10-year Treasury note BX:TMUBMUSD10Y. Mortgage rates tend to move in tandem with the yield on the 10-year Treasury note, which rises when investors see economic risks ahead.

Read more: Treasury market faces worst day in 6 months after Trump threatens European allies with tariffs related to Greenland

The 10-year Treasury note rose as investors reacted to Trump's threats to slap 10% tariffs on imports from eight European countries - Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands and Finland - starting Feb. 1 in retaliation for opposing his plan for the U.S. to take control of Greenland. Those tariffs would rise to 25% in June, he said.

The increase in the 10-year yield - and by extension the 30-year mortgage rate - was also due in part to a selloff in Japanese bonds, in reaction to spending plans by that country's prime minister.

"When political headlines clash, it is often difficult to tell which one has greater impact," Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, wrote in a note. "For perspective, the proposed U.S. tariffs on Europe amount to only $37 billion per year, and we expect a deal to be reached. Thus, higher global government bond yields appear to be the main driver."

Read more: Japan's long-bond yields surge to record highs. Why it may be a problem beyond Tokyo.

The jump in the 30-year mortgage rate reverses a downward slide in rates that many home buyers and homeowners took advantage of over the past few days. Aspiring home buyers along with homeowners applied for new home loans or to refinance their existing loans as rates fell.

"This is a similar pattern to what we saw last spring, when fears over tariffs specifically and geopolitical risk in general caused bond yields to jump and then remain elevated," Jake Krimmel, a senior economist at Realtor.com, told MarketWatch.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

At the same time, the jump in the 10-year Treasury rate "could totally wipe out the drop we saw last week in response to Trump's [mortgage-backed securities] play (which caused 10-year Treasury and the 30-year fixed-rate mortgage spreads to narrow)," he added.

Last Thursday, Freddie Mac (FMCC) reported that weekly average mortgage rates fell to the lowest level in over three years after Trump announced that he was directing the government to buy up $200 billion in mortgage-backed securities. That pushed the average 30-year rate down.

Housing affordability remains a key pain point for many American households. Home prices remain elevated, with the median price of an existing home reaching a new high in 2025 of $414,400.

Facing pressure from voters ahead of the midterm elections, Trump has proposed several ideas to address spiraling housing costs, with the mortgage-bond policy being among them.

Tuesday's 14-basis-point jump pushed the 30-year rate up to the highest level since Jan. 8, before Trump's bond-purchase announcement.

"For the housing market in general, reigniting the trade war risks another hit to consumers' pocketbooks, and a resurgence of geopolitical uncertainty means consumer confidence will likely dip, too," Krimmel said.

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-Aarthi Swaminathan

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January 20, 2026 13:38 ET (18:38 GMT)

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