The Property Academy Podcast How Trump's tariffs could LOWER your mortgage rates⎥Ep. 2041
Apr 13, 2025
A lively take on how proposed US tariffs might actually push New Zealand mortgage rates lower through bond market moves. Clear explanations of tariffs, swap rates, and why global policy shifts can speed Fed cuts. Market timing and a personal $6,500 investing loss add drama. Discussion also covers tourism gains, export shifts, and recession risks from economic uncertainty.
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How Tariffs Hurt Exporters And Consumers
- Tariffs raise import costs and usually make both exporters and domestic consumers worse off by adding a government-collected tax on top of the sale price.
- Example: Stephen Knight explains a 10% tariff on a $5,000 Fonterra shipment makes the importer pay $5,500, squeezing exporters and importers or pushing prices up for US consumers.
Markets Flee Equities Toward Bonds Lowers Swap Rates
- Market turbulence from tariffs drove investors out of equities and into safer assets like government bonds, pushing swap rates and borrowing costs lower.
- Andrew Nicol and Stephen Knight note one-year NZ swap rates fell ~0.2% after the tariff news, which can lower bank funding costs and fixed mortgage rates.
Tariffs Can Trigger Global Inflationary Pressure
- Tariffs can be inflationary if importers raise prices or production shifts domestically to pricier locations, pushing global prices up.
- Stephen Knight illustrates moving car production from Mexico to the US raises costs via higher US labour and real estate, feeding global inflation and potentially keeping rates higher.