Just as Relief Arrived, Mortgage Rates Turn Higher Again
For homebuyers, the window of relief barely had time to open.
Only days after mortgage rates slid to a three-year low, triggering a surge in loan applications, fresh geopolitical turmoil has sent borrowing costs climbing again — and the culprit isn’t inflation or Fed policy.
It’s Greenland.
Rates Reverse Course Overnight
On Tuesday morning, the average rate on a 30-year fixed mortgage jumped 14 basis points to 6.21%, according to Mortgage News Daily. The sudden move erased much of the progress made in recent weeks, when rates flirted with the 6% level for the first time since late 2022.
The spike followed escalating tensions between President Donald Trump and European leaders over control of Greenland — a standoff that’s now spilling into global financial markets.
Trade Threats Spark Market Turmoil
After repeated rejections from Denmark, Trump threatened to impose:
10% tariffs on eight European countries starting Feb. 1
Escalating to 25% tariffs if negotiations fail
Europe is now weighing retaliatory measures — and markets reacted fast.
S&P 500 fell 1.5%
10-year Treasury yield rose to 4.275%
Stocks and bonds sold off simultaneously
Because mortgage rates closely track Treasury yields, the impact on home financing was immediate.
Why Mortgage Rates Are So Sensitive
Mortgage rates don’t move on a single factor. They’re shaped by:
Treasury yields
Market volatility
Demand for mortgage-backed securities
In recent weeks, falling bond yields and a mortgage bond-buying directive from Trump helped push rates lower, raising hopes that the frozen housing market might finally thaw.
Tuesday’s sell-off reversed that optimism almost overnight.
Global Wildcards Add to the Pressure
The Greenland standoff isn’t the only surprise rattling markets.
Doug Wall, a senior loan consultant at Guild Mortgage, says a sudden rise in Japanese bond yields is also feeding into U.S. Treasury volatility.
“This Greenland thing and the Japan thing are two wildcards that came out of nowhere,” Wall said. “It just shows you that the world’s economies are all connecting.”
That interconnectedness means shocks abroad can quickly translate into higher monthly payments at home.
Housing Market Momentum at Risk
After three straight years of depressed home sales, many economists hoped 2026 would mark a turning point — assuming rates drifted lower and volatility calmed.
Now, that path looks less certain.
“Another trade war is the last thing the housing market needed,” wrote Colin Robertson, founder of The Truth About Mortgage. “We started off strong, but the Greenland situation could crush the momentum yet again.”
A Long-Term View Still Matters
Despite the sudden jump, mortgage professionals are urging buyers not to panic.
Rates today are still nearly a full percentage point lower than a year ago — translating to roughly $330 a month in savings on a $400,000 mortgage.
Wall, a 25-year industry veteran, keeps his advice simple:
“You can’t get emotional about it. Mortgages are a numbers game and a payment game.”
The Bottom Line
Mortgage rates had finally given the housing market a glimmer of hope — and geopolitics just threatened to take it away.
Whether this spike proves temporary or the start of another prolonged stall depends less on housing fundamentals and more on how far global trade tensions escalate.
For buyers and sellers alike, one lesson is clear:
In today’s market, even distant political battles can hit close to home.