Signs for the Trump and Biden campaigns are seen near a polling site in Flint, Mich. The uncertainty over the election’s results has pushed mortgage rates lower.
photo by SETH HERALD/AFP via Getty Images
Once again, mortgage rates have dipped to a record low — and
this time the movement was driven by concerns about the country’s political
future.
The 30-year fixed-rate mortgage averaged 2.78% for the week ending Nov. 5, falling three basis points from the week prior, Freddie Mac reported Thursday. During this same time in 2019, these loans had an average rate of 3.69%.
This was the 12th week in which mortgage rates set a new low
since Freddie Mac began tracking them in 1971. On average, rates have fallen to
a record low roughly once every four weeks this year.
The 15-year fixed-rate mortgage meanwhile held steady at an
average of 2.32%, while the 5-year Treasury-indexed hybrid adjustable-rate
mortgage rose one basis point to 2.89% on average.
The drop in the 30-year mortgage rate this week reflects concerns on the part of investors about how the presidential election will affect U.S. policy. Mortgage rates roughly track the direction of long-term bond yields, including the 10-year Treasury note
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which fell sharply in the wake of Tuesday’s election.
“The current uncertain outcome of the election appears to have led to a spike in demand for government bonds, placing downward pressure on mortgage rates,” said Matthew Speakman, an economist with Zillow
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“Bond market investors appear to be interpreting the uncertain election results as a sign that more economic stimulus is unlikely in the near term.”
Where mortgage rates will go from here is not clear. A new report from NerdWallet found that mortgage rates move unpredictably following presidential elections . In three of the last five presidential elections, mortgage rates moved more than half a percentage point afterward.
Rates have moved up and down following elections. Rates climbed when
President George W. Bush was re-elected in 2004 and when President Donald Trump
won in 2016, but moved down both times President Barack Obama won. The 2000 election
was an anomaly though: Mortgage rates held steady even throughout the
protracted recount in Florida, before beginning to fall in December.
Additionally, Senate Majority Leader Mitch McConnell has signaled he wants to settle on another round of stimulus before the end of the year, which could improve investors’ outlook.
See also: What a Biden or Trump win would mean for a second round of stimulus checks
Yet, even as mortgage rates fall once again to an all-time low, the
savings that home buyers can expect are quickly dwindling.
“The lack of available homes is pushing listing prices
considerably higher than a year ago,” said George Ratiu, senior economist at
Realtor.com. “The steep price gains are placing affordability front-and-center.”
Read More: Mortgage rates fall to another record low as election outcome remains uncertain