This week, the election significantly impacted mortgage markets, creating volatility that peaked midweek. While rates reached their highest point on Wednesday, they ended the week slightly lower overall. For homebuyers and sellers, understanding how these changes could affect borrowing costs and market activity is key to making informed real estate decisions.
The election results prompted investors to adjust their portfolios based on anticipated economic policies under the new administration. Stronger economic growth, higher inflationary pressures, and proposed tariffs are expected to create upward pressure on inflation levels, which could impact mortgage rates. For buyers, this means that locking in a mortgage rate sooner rather than later might help secure more favorable terms before rates potentially rise. Sellers should be aware that higher borrowing costs may affect buyer demand, particularly in price-sensitive markets.
In addition, anticipated tax cuts and increased government spending could lead to a larger budget deficit, requiring the government to issue more bonds. To attract buyers for these additional bonds, yields typically rise, which can push mortgage rates higher. For the housing market, this could mean increased costs for buyers, potentially slowing activity in higher price ranges while maintaining competition in more affordable segments.
Meanwhile, the Federal Reserve’s most recent meeting delivered no surprises, as officials reduced the federal funds rate by 25 basis points to a target range of 4.50% to 4.75%. The Fed’s statement suggested that risks to employment and inflation goals are “roughly in balance,” and officials plan to continue gradually reducing rates. However, it’s important to note that mortgage rates are tied to long-term interest rates, which are influenced by broader economic factors like growth and inflation expectations, rather than short-term rate cuts by the Fed.
h in the services sector, with the ISM national services index climbing to 56.0, the highest level since April 2022. Resilient consumer demand for services suggests that segments of the economy remain robust despite rising prices. For the real estate market, this strength could help sustain demand in certain areas, particularly those tied to service-driven industries, even as mortgage rates fluctuate.
For buyers, the current environment underscores the importance of acting strategically. With mortgage rates still relatively low but likely to trend higher, locking in a rate soon could save significant costs over time. Sellers should remain aware of how rising rates and inflation may shape buyer behavior and price sensitivity. By staying informed on these economic developments, you can better navigate the market and achieve your real estate goals.
