Bankers are growing frustrated as President Donald Trump’s trade policy causes turmoil in markets and confusion for clients. But banking trade groups in Washington — at least publicly — are remaining silent.

Republican Senator Josh Hawley sent a letter urging the Justice Department to investigate FICO’s price increases, which he said have “been borne by borrowers, especially lower-income borrowers.”

From reduced demand for auto loans to a slowdown in mergers and acquisitions, here’s some of the new trade war’s potential fallout for lenders.

Federal regulators’ plan to rescind reforms to the anti-redlining Community Reinvestment Act implementation rules disappoints community advocates, but gives banks clarity by reverting to longstanding CRA rules.

The director, confirmed less than a month ago, has issued 12 orders via the social media platform that reverse Biden-era initiatives.

Explaining Monday’s Wild Ride in The Bond Market

It was an extremely volatile, frustrating, and downright weird trading day for the bond market. After starting the overnight session near the lowest yields of the year, the rest of the day was dominated by heavy selling. Ask any market expert to predict today’s movement based on a simple inventory of news and events, and a 17bp jump in 10yr yields would be on exactly zero bingo cards. That leaves us to try to piece together best guesses from a laundry list of potential contributors. These are detailed in today’s video, but they include things like the inflation implications from trade policy, budgetary implications (lack of tariff revenue implies Treasury issuance), timid buyers ahead of this week’s Treasury auctions, fear of reduced foreign bond buying, and a general move to cash as traders look for new opportunities created by recent chaos. 

Econ Data / Events

Jobless Claims

219k vs 225k f’cast, 225k prev

Continued Claims

1.903m vs 1.860m f’cast, 1.847m prev

ISM Services

50.8 vs 53.0 f’cast, 53.5 prev

ISM Employment

46.2 vs 53.9 prev

ISM Prices

60.9 vs 62.6 prev

Market Movement Recap

10:01 AM Weaker overnight with more selling early.  MBS down 3 ticks (.03) and 10yr up 6bps at 4.065

10:18 AM Additional losses on “tariff pause” headlines.  MBS down 3/8ths and 10yr up 14.4bps at 4.151

03:40 PM Back to weakest levels of the day after a modest bounce.  MBS down nearly 5/8ths and 10yr up 16bps at 4.165.

Tariff volatility giveth and taketh from interest rates.  Up until Friday afternoon, it’s been mostly “giveth-ing.”  In other words, the prospect of trade wars between the US and numerous foreign countries has generally caused weakness in the stock market and strength in the bond market (stronger bonds = lower rates).  That pattern began breaking down on Friday, although it wasn’t apparent at the time because mortgage rates still managed to close at the lowest levels of the year. Notably, though, rates began Friday at even lower levels. Lenders were forced to increase rates in response to bond market weakness. That weakness kicked into overdrive Today. While there was certainly some volatility surrounding news headlines that were less than credible (specifically, that Trump was considering a 90 day pause on Tariffs), bonds maintained steady selling pressure all day. As a result, mortgage lenders were under progressive pressure to bump today’s mortgages rates higher several times.  The net effect is that we’ve moved from 2025’s lowest rates to highest since late February in the space of 24 hours.  That said, today’s highs are right in line with many other days from the past several weeks.  In nuts and bolts terms, this means the average top tier 30yr fixed rate was briefly as low as 6.55% on Friday morning and is now at 6.82%.

It’s been an interesting Monday so far for the bond market (and stock market for that matter). Despite a big risk-off move (stocks and yields lower) to start the overnight session, markets gradually unwound that trade starting in Europe. Motivation generally stemmed from a cavalcade of headlines suggesting that US trade partners were “willing to negotiate on tariffs.” Then sentiment kicked into overdrive when a headline hit the wires regarding a potential 90 day tariff pause. It has since been debunked, but the some of the associated selling pressure remains. Don’t think of this as markets ignoring reality. Rather, yields have simply moved back in line with the prevailing selling trend that began around 4am ET.

“Many people told Beethoven that he would never be a musician because he was deaf. Did he listen?” This week hundreds of mortgage bankers descend on Washington DC for the annual advocacy conference organized by our MBA, and they hope that those in Congress listen. The Consumer Finance Protection Bureau will certainly be a discussion topic. The CFPB being minimized leaves a vacuum which, it is believed, will fall back on the states. Another topic will be how applicable is the Community Reinvestment Act (CRA) for lenders that don’t accept deposits, like IMBs? Back in the lending trenches, LOs are focused on connecting with borrowers, especially previous borrowers where the servicing has been sold. Today on Now Next Later, join Sasha and Jeremy for 30 minutes as they chat with Skye Laudari, CEO of Crib Equity, about how the platform is helping mortgage companies connect with more homebuyers, particularly in high-cost areas like California. They’ll dive into how Crib Equity benefits first-time buyers and mortgage loan officers, offering a fresh approach to homeownership. (Today’s podcast can be found here and this week’s is sponsored by Figure. Figure is shaking up the lending world with its five-day HELOC, offering borrower approvals in as little as five minutes and funding in five days. Lenders, give your borrowers an experience they will rave about. On today’s hear an interview with Polunsky Beitel Green’s Marty Green on tariff impacts as they pertain to the Fed’s decision making moving through 2025.)

The Dow Jones Industrial Average dropped over 2,200 on Friday, the second day of a sell-off due to tariffs, but that could be good for mortgage rates.