By Danielle Kaye | New York Times
Mortgage rates jumped this week as investors processed the potential inflationary effects of President-elect Donald J. Trump’s win, accelerating a weekslong increase that could keep many buyers and sellers on the sidelines.
The average rate on a 30-year mortgage, the most popular home loan in the United States, rose to 6.79 percent this week, the highest since July, Freddie Mac reported on Thursday. That was up from 6.72 percent a week earlier, and about 0.7 percent above where rates stood six weeks ago. Rates peaked at about 7.8 percent late last year and had been easing until early October, when stronger-than-expected economic reports and bond market bets on Mr. Trump’s win drove them up again.
The latest rise in borrowing costs is linked to Mr. Trump’s decisive election victory. Mortgages tend to track the yield on 10-year Treasury bonds, which jumped 0.2 percentage points on Wednesday — its biggest move in more than two years — in a sign that investors are worried about Mr. Trump’s proposals, from taxes and tariffs to immigration, fueling inflation and interest rate increases.
“It is clear purchase demand is very sensitive to mortgage rates in the current market environment,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “As soon as rates began to rise in early October, purchase applications fell, and over the last month have declined 10 percent.”
Investors are betting that the Federal Reserve will cut its benchmark rate by a quarter percentage point at the central bank’s meeting on Thursday. Expectations of Fed rate cuts typically push down mortgage rates, as they did in the lead-up to the Fed’s half-point cut in September. That downward drift was a welcome development for prospective buyers — and for potential sellers, many of whom are locked into the low rates they secured early in the pandemic, when the average 30-year rate was around 3 percent.
