Anyone buying or refinancing a home wonders: how will the election affect mortgage rates? It's been a tough road for prospective buyers, especially in cities where prices remain discouragingly high. And for those who bought recently at over 7% mortgage rate, relief would be, well, a relief.
Happily, the answer is yes: the 2024 election will impact mortgage rates, though not immediately. That’s because mortgage rates are influenced more by macroeconomic factors than political factors. According to Chad Breeden, owner and founder of Sentry Real Estate, when the administration shifts, new economic policies can either boost or reduce market confidence and influence interest rates.
“What matters most is how the markets react to economic policies post-election.” shares Dutch Mendenhall, Founder of RADD Companies and author of "Money Shackles: The Breakout Guide to Alternative Investing."
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How will the election affect mortgage rates
Economic factors influencing mortgage rates include monetary policy, government spending and fiscal policy, economic growth and employment. Economic policies can also influence Federal Reserve decisions; if economic priorities change, there could be increases or delays in interest rate adjustments. While the Federal Reserve does not directly control mortgage rates, its actions do influence rates indirectly, and variable-rate mortgages and adjustable-rate mortgages typically see rates decline after a Fed interest rate cut.
At the latest Fed meeting in September, the federal funds rate was cut for the first time in four years. Following this decision, mortgage rates continued declining and reached the lowest level in two years. As of September 26, the average 30-year mortgage rate was 6.08%, down 1.23% from the year before, according to Freddie Mac. You can use our tool below to compare purchase and refinance rates today.
According to Breeden, “mortgage rates could stabilize or slightly decrease” if Harris becomes president, due to her policies aimed at improving affordability for middle- and lower-income Americans. On the other hand, if Donald Trump wins, “mortgage rates may rise due to his plans to extend tax cuts and increase tariffs, both of which could drive inflation higher and lead to the Federal Reserve keeping interest rates elevated,” he shares.
Mortgage rates during election year
There’s a common misbelief that elections negatively impact the housing market, but there’s little evidence to prove this theory. When you compare historical data, you’ll find that there’s not enough of a change to suggest that the presidential election has a significant impact on mortgage rates, reports the company Chris Doering Mortgage.
Dan Hnatkovskyy, CEO and co-founder of NEWHOMESMATE, also shares with Kiplinger that “while the presidential election may create some short-term uncertainty in the mortgage market, its direct impact on rates will likely be limited. There was no clear pattern of rates consistently rising or falling in past election years due to elections alone.”
The bottom line
If you're waiting for election results to buy a home, you should probably focus more on other macroeconomic factors. For example, potential interest rate cuts (if any more are in store) at the next Fed meeting and whether inflation continues to cool will likely have more of an impact on mortgage rates than the election.
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