Mortgage Warning Issued Over Trump's Immigration Crackdown

President Donald Trump's promise to lead the biggest deportation push in U.S. history could have a dramatic impact on the country's economy and housing market, sending inflation and construction costs up while shrinking the nation's workforce, an expert has told Newsweek.

Why It Matters

Mortgage rates, which are still hovering around the 7-percent mark, could increase at the same time as home prices, Melissa Cohn, the regional vice president of William Raveis Mortgage and a 40-year veteran of the industry, told Newsweek. She called it "a double-whammy" for Americans.

What To Know

Curbing illegal immigration at the U.S.-Mexico border is one of the Trump administration's priorities. "We will begin the process of returning millions and millions of criminal aliens back to the places from which they came," Trump said during his inauguration speech. "We will do it at a level that nobody has ever seen before."

It was estimated that there were around 11 million undocumented people living in the U.S. without permission in 2022; that number has likely grown to almost 14 million in 2024, The New York Times reported.

Trump has said that his priority is to remove criminals; according to Immigration and Customs Enforcement (ICE), around 655,000 noncitizens in the country have criminal convictions or pending charges, though many are for minor offenses.

The mass removal of migrants from the country could have a dramatic impact on the country's workforce: according to data from the Pew Research Center, 8.3 million unauthorized immigrants were part of the U.S. workforce in 2022, representing about 4.8 percent of all workers. The housing construction sector in particular employs large numbers of foreign-born workers.

"People are concerned about inflation being reignited, and the possibility of mortgage rates going higher versus lower," Cohn said of the first few weeks of Trump's return to the White House.

"For the past two-and-a-half years, we've been talking about how we're heading into a lower-rate environment, how the economy is slowing down, how inflation is easing, mortgage rates and rates in general can come down," she added. "But once again, we've hit a roadblock, and that roadblock is not just tariffs, but also tax cuts, and immigration policies."

The 30-year, fixed-rate mortgage rate was 6.87 percent as of the week ending on February 13, according to Freddie Mac, up 0.1 percent from a year earlier. Despite recent cuts by the Federal Reserve, mortgage rates haven't eased as much as homebuyers and homeowners would have hoped, due in part to the strong labor market.

Inflation increased to 3 percent in January from 2.9 percent a month before, according to the latest data. On his social media platform, Truth Social, Trump blamed the increase in the cost of living on the previous administration, calling it "Biden inflation."

While inflation remains much lower than at its peak in June 2022, it is still higher than the central bank's goal. This, together with the resilience of the labor market, suggests that the Federal Reserve won't cut rates any further during its next meeting.

"With a still-strong labor market, inflation just above target, and much White House policy uncertainty, the Fed is unlikely to signal further rate cuts before May or June," Redfin economist Chen Zhao wrote in a recent update commenting on the latest job market report.

"While mortgage rates have fallen slightly in recent weeks, they are likely to remain high and at risk of significant volatility."

What Could Send Inflation and Mortgages Back Up

For Cohn, mass deportations of migrants living in the U.S. could have a dramatic impact on the U.S. housing market—causing both prices and mortgages to go up.

"If Trump really deports as many undocumented people as he's discussed, that will make workers harder to find, more expensive, and that will also become inflationary," Cohn explained.

Housing market experts have already expressed concerns over the cost of housing construction shooting up because of Trump's mass deportation efforts.

"Immigration restrictions could lead to labor shortages in the construction industry, increasing costs and possibly slowing down project timelines," Cynthia Seifert, founder of real estate seller leads generator KeyLeads, previously told Newsweek.

Tariffs could also increase the cost of goods. "For example, a tremendous amount of lumber that we use in the U.S. comes from Canada, and in all the rebuilding from the storms last fall and the fires in California, the last thing in the world anyone needs is for the cost of the goods for construction to go up," Cohn said.

"If the cost of a new home increases, people will look at the existing housing inventory to purchase, because those houses have already been constructed," Cohn said.

"That would further exacerbate the inventory issue, because you can't add to inventory with existing homes—the only way to add to it is to build new homes," she added. "The last thing the market needs right now is something that will cause prices to go up, and then the cost of borrowing to go up at the same time. It's a double-whammy."