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REAL ESTATE
In Trumpian Twist, Win Translates to Higher Mortgage Rates
Presumably, this is not what MAGA expected
Mortgage rates surged again this week, with the 30-year fixed rate up to 7 percent, according to Bankrate’s weekly survey of lenders. And they could keep climbing, a result of the red wave on election night.
A couple months ago, the mortgage story was all about the Federal Reserve cutting the federal funds rate and mortgage rates following. Now, housing economists and mortgage players have seized on a new narrative — four more years of President-elect Donald Trump will mean ever-growing deficits.
Fixed mortgage rates are not set directly by the Fed, but by investor appetite, particularly for 10-year Treasury bonds. The 30-year fixed-rate mortgage rate moves with the yield on a 10-year Treasury bond — and those yields have risen in recent weeks, driven in part by strong economic data and in part by expectations that Trump would reclaim the White House.
For now, at least, the consensus is that Trump’s victory, and Republican control of the U.S. Senate, mean higher mortgage rates.
Last week, Mark Zandi, chief economist at Moody’s Analytics, spelled out the new line of thinking.
