Trump's economic agenda for his second term is clouding the outlook for mortgage rates
Donald Trump’s election win is clouding the outlook for mortgage rates even before he gets back to the White House
LOS ANGELES — Donald Trump’s election win is clouding the outlook for mortgage rates even before he gets back to the White House.
The president-elect campaigned on a promise to make homeownership more affordable by lowering mortgage rates through policies aimed at knocking out inflation. But his proposed economic agenda could potentially set the stage for mortgage rates to move higher, some economists and analysts say.
Mortgage rates are influenced by several factors, including moves in the yield for U.S. 10-year Treasury bonds, which lenders use as a guide to price home loans. Treasury yields rose in recent weeks even after the Federal Reserve cut its benchmark interest rate, which influences rates on all types of loans including mortgages. Investors appeared to question how far the Fed should cut rates given the strength of the economy.
Then yields surged further immediately after Trump’s victory, sending the average rate on a 30-year mortgage up to 6.79%, according to mortgage buyer Freddie Mac.
“Given what we’re seeing in bond markets, investors are expecting higher rates under a Trump administration and are starting to position in that direction already,” said Danielle Hale, chief economist at Realtor.com. “So, if overall rates are higher, that would tend to also mean that mortgage rates would move higher, too.”
Trump says he wants to impose tariffs on foreign goods, lower tax rates and lighten regulations, policies that could rev up the economy, but also fuel inflation and increase U.S. government debt — and, say some economists, lead to higher interest rates and in turn higher mortgage rates.
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