Mortgage Rates Continue To Rise Since Donald Trump’s Election
Long-term mortgage rates in the U.S. surged in the wake of Donald Trump’s election, and they continue to rise as the calendar year comes to a close. Experts say the interest rate hikes are likely due to bond investors’ beliefs in the president-elect’s stated plans to cut taxes and invest heavily in infrastructure spending on roads and bridges.
The 30-year fixed mortgage rate, typically the most popular among buyers, has risen as high as 4.03 percent. This marks the highest rate since July 2015. The rate for 15-year loans rose to 3.25 percent – a far cry from the 3.14 percent rate seen before the election.
Rising mortgage rates are usually seen as a threat to the housing market, which has seen surges from several years of record-low interest rates. Although rising rates could eventually reduce demand, the National Association of Realtors has reported that sales of existing homes are still pacing at the highest level since February 2007. However, there may be certain consumer sectors affected by the rising rates more than others.
“Certainly there are households on the margin where the difference between 3.5 and 4 percent is the difference between qualifying for a loan and not qualifying for a loan,” explained Ralph McLaughlin, chief economist at housing data provider Trulia.
McLaughlin went on to say he expects mortgage rates to continue to rise, though there is unlikely to be a dramatic drop in home sales until the 5 percent mark is reached.
Image via Flickr/josephlkohn