Election is over – watch mortgage rates rise
The election is over, and whether you supported Trump or Clinton, we all have to face that we are now looking at President-elect Donald Trump. As you know, he promised when elected, during his first hundred days he would push to roll back much of what President Obama accomplished. Unfortunately for consumers, this means much of the consumer protection legislation that was passed could disappear or be seriously revised.
Since the recession, the Feds have kept interest rates low and continued government subsidies for mortgage bonds to keep mortgage rates low. However, Fed Chairman Yellin has already signaled that an interest rate hike in December is likely and that mortgage bond subsidies will end at that time.
Mortgage rates up approximately 1/2% in last few weeks
In the meantime, mortgage rates started rising even before the elections, and have picked up speed since the results were announced. Lenders tell me that average mortgage rates are already up about 1/2% in the last few weeks. Corporate America and of course this includes banks, are thrilled about the plan to lower taxes on the corporations and the wealthy. If you couple those tax cuts with regulation roll backs, who really knows where mortgage rates could go?
One of the potential Fed Chairmen that Trump has been talking with has said that it’s time for rates to return to a more normal level. This means we could be looking at as much as a 2% increase over the next 2 years. That would normalize our mortgage rate environment which many of you may have forgotten typically runs around 6%.
Stay tuned. This could be a very different year than the last eight years since the recession.