Jerry Jackson Following Donald Trump’s election victory, bond yields have surged, signaling the possibility of higher mortgage rates in the near future. While the Federal Reserve recently cut rates, this doesn’t always translate to lower mortgage rates. For prospective homebuyers and those considering refinancing, the current environment might be the last chance to secure a lower rate before an upward trend sets in.
Why Are Mortgage Rates Rising?
Bond yields are climbing as investors anticipate increased inflation and stronger economic growth under Trump’s policies. Danielle Hale, chief economist at Realtor.com, explained, “The movement in rates suggests that investors expect either higher inflation or a boost in economic activity, both of which push mortgage rates higher.”
Despite the Fed’s recent quarter-point rate cut, the average 30-year fixed mortgage rate rose from 6.20% in September to 6.79% this week, according to Freddie Mac. This trend highlights that mortgage rates often move independently of Federal Reserve actions.
Lisa Sturtevant, chief economist at Bright MLS, noted, “Trump’s fiscal policies, including tax cuts, are likely to increase the federal deficit and reignite inflation, making mortgage rates more volatile and higher through 2025.” Experts believe that tariffs and increased government spending could contribute to these inflationary pressures.
Is Now the Time to Lock in a Rate?
Market volatility makes timing difficult, but there could still be a brief opportunity to lock in lower mortgage rates. Nina Gidwaney of Chase Home Lending remarked, “The market has already priced in the Fed’s rate cut, so current mortgage rates reflect that adjustment.”
Danielle Hale added, “Markets often overreact, so there’s a chance rates could stabilize briefly before climbing further.” She advises homebuyers and those refinancing to act quickly, as any correction may be short-lived.
What’s Happening in the Housing Market?
Rising rates are coinciding with positive trends in housing inventory. Realtor.com reports that the number of homes for sale reached pre-pandemic levels by October, while median home prices remained steady at $424,950.
However, Lisa Sturtevant warned, “The housing market’s recent stability could be temporary. The coming months might bring renewed challenges for buyers as mortgage rates climb and economic uncertainty continues.”
Key Takeaways for Homebuyers and Refinancers
- Act Quickly: With mortgage rates expected to rise, locking in a rate now could save you money in the long term.
- Monitor the Market: While a brief correction is possible, volatility means rates could climb again soon.
- Consider Market Conditions: Increased housing inventory and stable prices offer a unique opportunity, but these trends may not last.
- Prepare for Inflation: Trump’s fiscal policies may lead to higher inflation, keeping mortgage rates elevated for the foreseeable future.
What’s Next for Mortgage Rates?
If bond yields and inflation continue to rise, mortgage rates are likely to follow suit. The Fed may hold off on further rate cuts, leaving homebuyers and refinancers with fewer opportunities to secure favorable terms.
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