Mortgage rates could remain stubbornly high after Trump win heres why

Mortgage rates look poised to stay stubbornly high following Donald Trump’s White House win – despite the Federal Reserve’s interest rate cuts and the president-elect’s pledges to cut homebuyers a break.After Trump’s sweeping win on Wednesday, 30-year fixed mortgage rates briefly surged before settling at 6.98% the next day, according to Mortgage News Daily. On Friday, they settled at 6.92%.That’s bad news for house hunters, who had hoped the Fed’s recent interest rate cuts would finally ease mortgage rates, which surged during the pandemic as government stimulus helped kickstart inflation on everything from groceries to cars.The problem: While mortgages can often align with the Fed’s key lending rates, they are more directly tied to 10-year treasury bond yields.These treasury yields often spike on reports of strong economic growth, which can cause inflation.

The US 10 Year Treasury – which jumped to 4.475% on Wednesday – closed on Friday at 4.302%.If Republicans gain control of the House, Trump will face fewer obstacles in pushing through his economic proposals.Investors’ anticipation of increased spending on strong economic policies could drive bond yields higher.“Since the middle of September, there have been a series of economic data reports showing that the economy is stronger than expected,” Melissa Cohn, regional vice president of William Raveis Mortgage in New York, told CNBC.

“When people have jobs and make money, they spend it, and that’s inflationary.”Cohn said the rate cut “will be helpful to consumers who have home equity loans, car loans, and other loans that are impacted by the prime rate.But it’s not going to move the needle on mortgage rates.” That’s because mortgage rates are not ultimately determined by the Fed.

Instead, “it’s all based on economic data.” On that front, experts say some of Trump’s key policy goals could, whether or intended or not, spur higher rates.“Proposed tax cuts by Trump,...