After Donald Trump’s election win, bond yields have surged, signaling potential increases in mortgage rates. For homebuyers or those considering refinancing, this could be a last chance to secure a lower rate before the market shifts upward.
Why Are Mortgage Rates Expected to Rise?
The surge in bond yields reflects investor concerns about inflation and stronger economic growth. Danielle Hale, Chief Economist at Realtor.com, explained, “Investors are bracing for stronger inflation or growth, which suggests mortgage rates are likely to rise.”
The Federal Reserve recently cut rates by a quarter point, but mortgage rates don’t always mirror the Fed’s moves. For example, after a 0.50% Fed rate cut in September, the average 30-year fixed mortgage rate stood at 6.20%, according to Freddie Mac. By this week, that figure had climbed to 6.79%.
Lisa Sturtevant, Chief Economist at Bright MLS, attributes this trend to Trump’s fiscal policies, which could increase federal debt and inflation. She noted, “Rising bond yields driven by fiscal agendas will likely keep mortgage rates unpredictable and trending higher into 2025.”
What Does This Mean for Buyers and Homeowners?
Should You Lock in a Rate Now?
Experts recommend acting soon to lock in a mortgage rate. Nina Gidwaney of Chase Home Lending highlighted the difficulty of timing the market, stating, “The market has already accounted for the Fed’s rate cut.” However, Danielle Hale suggested that temporary dips could offer brief opportunities, as market reactions often stabilize after initial fluctuations.
For those ready to purchase or refinance, acting before the year ends might be prudent. According to Realtor.com, the number of homes for sale has risen, reaching the highest levels since pre-pandemic times. Home prices have also softened, with the median price holding steady at $424,950 compared to last year.
What’s Next for the Housing Market?
While housing inventory and prices are stabilizing, Sturtevant warns this trend may not last. “The market was starting to stabilize after the pandemic, but rising rates and economic uncertainty could make buying more challenging in the months ahead,” she said.
The Bigger Picture: Economic Impacts
Trump’s fiscal policies, including tax cuts and proposed tariffs, could exacerbate inflation and drive further rate increases. Sturtevant noted, “Higher inflation may force the Fed to slow or halt additional rate cuts, keeping mortgage rates elevated.”
With affordability already stretched for many buyers, rising rates could push homeownership further out of reach. For now, buyers and homeowners looking to refinance should consider taking advantage of current rates before they climb higher.
Key Takeaways
- Bond Yields Surge: Post-election market shifts signal higher mortgage rates, despite recent Fed rate cuts.
- Current Rates Rising: The average 30-year fixed mortgage rate has increased to 6.79%, up from 6.20% in September.
- Market Opportunity: Home inventory has grown, and prices remain steady, making now a good time for buyers to act.
- Uncertain Future: Fiscal policies and inflation concerns could lead to prolonged rate hikes, challenging affordability.
Share Your Thoughts
Are you considering locking in a mortgage rate before rates climb further? Share your perspective and questions in the comments below!