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MORTGAGE RATES FORECAST
Mortgage rates are surging to 25 year highs. Mortgage rates for 700 plus credit score borrowers are 7.5% on FHA loans. Lower credit score borrowers with credit scores down to 500 FICO are priced at 7.75% with as much as 3% in points. Mortgage rates on conventional loans are 8.125% for 720 credit score borrowers.
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5 Replies
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We’ll see how the 30 year treasuries does this coming week. Will it go pass 5%?
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One considers many determining factors to forecast and predict future mortgage rates, such as inflation rates, political situations, and the economy. Looking at the recent elections and the election of President-Elect Donald J. Trump in this regard, a few thoughts come into the picture:
Economic Policies
Impact on Interest Rates: If the Trump administration focuses on tax cuts or spends more money to boost the economy, then interest rates will rise, as inflation expectations will also increase.
What the Federal Reserve Will Do: The means through which the Federal Reserve responds to the economy (such as the central bank’s decision to alter the federal funds rates) will greatly affect mortgage rates.
Market Reactions
Investor Sentiment: Political changes lead to fluctuations in the bond market based on anticipated economic changes. Suppose they expect overhauls that will encourage the economy. In that case, they will sell bonds since they expect higher returns and increased mortgage rates.
Inflation Concerns
Increasing Inflation: If inflation increases further, mortgage rates will also increase because lenders aim to counterbalance the reduced purchasing power of their payments in the future.
Housing Market Dynamics
Demand and Supply: If the economic policies employed can generate a great demand for housing but do not increase its supply, the mortgage rate will rise.
It is hard to expect much economic activity. Still, looking at the outcomes of the elections, the economy is likely to expand, leading to inflation and increased mortgage rates. Borrowers should keep watching the market and rate the environment. When the opportunity arises, they should consider locking in the rates.
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The How Presidential Elections Affect Mortgage Rates is weak and will not be very wide, according to the historical data, of rates swinging around election cycles. But yes, the ambiguity that elections bring to the surroundings can move the market and, respectively, mortgage rates.
Trump’s election has the place, probably overshadowed by his victory, to estimate the range of mortgage rates. Still, economists and analysts expect that the new president in the US will lead to higher rates. Trump’s policies, such as restricting imports, tax cuts, and deregulation, will likely grow the US economy but worsen inflation and increase national expenditure. Such measures will result in higher lending rates, subsequently forcing up home loan rates.
As for Donald Trump and his plans for the US economy, Lisa Sturtevant, chief economist with Bright MLS, assumed mortgage rates would rise and become volatile until the end of 2024, during 2025. The anticipated national economy indicators were around 30-year mortgages in Donald Trump’s second term, which are expected to range between 5.5% and 6.5%.
But Kamala Harris, as the candidate for filling the post of President on a Democratic ticket, has outlined a four-year economic plan in which she plans building three million housing units, providing tax subsidies to builders of starter homes, and giving down payment assistance of $25,000 to novice home buyers. However, these may become the hallmark aspects of the Harris administration and even be cited as significant in the California real estate market, which, at the very basic level, is more the case than Trump suggested.
However, for both cases, it may be a difficult situation and certainly a prediction, even finding it elusive with all the possible ramifications of various factors such as mortgage rates under a Trump or Harris administration. So, in this case, there is consensus among many “political” economists that Trump’s terms entail rising mortgage rates. At the same time, Harris aims to reduce affordability barriers and stimulate an increase in buyers.
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A presidential election doesn’t have a large effect on mortgage rates, and based on historical data, rates stay mostly the same during an election year, too. However, the associated stress of elections can impact the market, affecting mortgage rates.
According to researchers and economists, Trump’s win has muddied the outlook for mortgage rates since they predict his economic policies will lead to higher rates as well. Some of Trump’s proposals have been imposing tariffs on foreign goods, lowering taxes, and reducing regulations. This would positively affect the economy and increase inflation and the national debt, which could result in rising interest and mortgage rates.
Foreseeing Trump’s effect on mortgage rates, Lisa Sturtevant, chief economist with Bright MLS, has said that, from where she sees it, Trump’s policies will lead to unpredictable mortgage rates from around the end of 2024 and extending into 2025. During this time, the National Association of Realtors has suggested that the average rate will be between 5.5% and 6.5% on a 30-year and 30-year mortgage throughout Trump’s second term.
In the meantime, for the case of the Democratic nominee for President Kamala Harris, he has proposed a four-year economic strategy with ideas such as constructing three million housing units… tax breaks for builders of starter homes, and providing cash contributions of $25,000 to first-time homebuyers. She has more than Trump’s ideaś, but Harris 4’s plan is also complicated and might need an aggressive push of allied local and federal authorities to effect it properly.
Considering the multifaceted nature of mortgage rates, such as government, economy, and market, and how they may interact within a Trump presidency or a potential Harris presidency, looking at mortgage rates under such presidencies would take much work. However, it can be anticipated that Trump’s administration policies would raise mortgage rates. In contrast, Harris would go in the opposite direction and strive to increase homeownership.
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In most countries, mortgage rates are not affected so much by elections – the rates may change only slightly – or presidential elections won in one term or another, or re-election campaigns also do not influence the markets. However, the psychological aspect of uncertainty before the elections can affect the market and, consequently, the mortgage rates.
Economists and analysts now have a somewhat pessimistic view as Trump’s election has increased the risk and uncertainty of mortgage rates. Hence, more rules are coming up. If exercised, Trump’s policies, ranging from tariffs on foreign products to lower tax rates and lighter regulations, may spur the economy and increase debt and inflation for the US government. The result would equate to higher interest rates for the economy along with higher mortgage rates.
Changes in mortgage rates due to United States policies will remain rife and volatile, especially after Trump’s re-election. According to Bright MLS’ Chief economist Lisa Sturtevant, this may remain the case until the end of 2024. Around 5.5% and 6.5% from the National Association of Realtors’ estimation of the average 30-year mortgage during Trump’s presidency are anticipated to keep shifting.
In stark contrast, Kamala Harris, who is the Democratic candidate for the President, has charged her economic advisors to come up with a four-year program encapsulated in a simple housing policy that includes an offer to build three million housing units, tax deductions for starter home builders and an offer of $25,000 to first-time buyers as a contribution towards their down payment on the house. Harris’s plan is broader than that of Trump’s. Still, it also has limitations, and more importantly, it would need quite a pull from the local and federal government for it to work.
It is also very difficult to say where the mortgage rate will stand under a Trump administration or a possible Harris administration. The interplaying factors determining these rates are dynamic and volatile, including government structure, economy, and even the market. Nevertheless, it appears that mortgage rates will rise under Trump’s policies. In contrast, according to Harris’s plan, the rate of homes should become more affordable, and the number of homeowners should increase.