Fed likely to maintain rates
An interest rate cut will be unlikely Wednesday, industry analysts have said, as the Federal Reserve remains conservative amid looming tariff-induced economic changes.
A drop in employment and an increase in prices are expected to come out of President Donald Trump’s tariffs, which remain paused for all countries except China until July 9. These significant economic factors could push the economy down, which the Fed looks to mitigate by changing rates accordingly.
Though the Fed does not set mortgage rates, its rate impacts various factors that influence mortgage rates.
Mortgage rates more closely follow bonds, as both are considered long-term investments, and rate changes impact bond yields. And as Fed rates increase, so do the borrowing costs for banks, which are passed on to buyers in the form of higher mortgage rates.
The jobs report released Friday showed a higher-than-expected job growth and steady unemployment rates. Additionally, an increase in consumer spending reflects an economy not yet shaken by tariffs, giving the Fed space to maintain rates between 4.25% and 4.50%.
The current 30-year fixed mortgage rate average was 6.76% as of May 1, according to mortgage giant Freddie Mac.
US rushes to order ahead of tariffs
Data released Tuesday by the U.S. Bureau of Economic Analysis found a spike in the country’s trade deficit, pointing to a rush of purchases from foreign countries ahead of tariffs.
According to the government data, imports increased 23.3% this year compared to last and 92.6% year to date. Imports of consumer goods hit a historic high in March. Tariffs will be imposed on July 9 for all countries except China, which has tariffs up to 145%.
One large retailer of home fixtures, Floor & Decor, said on an earnings call last week that it expedited overseas orders to arrive before the tariffs take effect.
Hawaii's ‘green fee’ to support environmental protections
Hawaii is nearing the enactment of a new law to increase a tourism tax to fund protections against natural disasters, including supporting efforts to fortify homes.
The funds aim to ensure “the health and safety of Hawaii’s lands, waters, and people,” as written in the bill. It is meant to support the maintenance and protection of reefs, beaches and trails, among other preservation measures, and initiatives to protect residences from the impacts of climate change.
Such planned home protections include reinforcing houses against hurricanes with hurricane clips. These metal supports strengthen the roof's connection to the framing. The taxes will also help mitigate the impacts of rising sea levels by adapting infrastructure along the coasts.
Legislators call the bill the "green fee," and Gov. Josh Green has said he will sign it into law. The bill would add a 0.75% tax onto hotel rooms, timeshares and short-term rentals, bringing the total tax to 11% beginning Jan. 1, 2026.