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What Will Mortgage Rates Do Now?

In Freddie Mac’s last Primary Mortgage Mortgage Survey (PMMS) before the presidential election wrapped up, released on Thursday, mortgage rates moved slightly—but there is much uncertainty as to what the future holds now that Donald Trump has been elected president.

Mortgage rates having hovered above record lows for much of the year and seemingly on the upward climb in the weeks prior to the election; where will they go from here under a Trump presidency?

“Our economy is actually standing pretty well,” said Ralph DeFranco, Chief Economist with Arch Mortgage Insurance. “The U.S. has created about 2.5 million jobs over the last year. Interest rates should actually be much higher than they actually are right now. They’ve just been artificially suppressed by weakness overseas and concern over things like Brexit.”

DeFranco continued, “Where they are headed is a harder question to answer after the election, because there is so much uncertainty about what a Trump Administration is going to do and what policies he is going to pursue. I personally think that they will probably rise faster than previously forecasted, because I expect that with a Republican Congress and president, they’re going to push forward with a large tax cut and large infrastructure spending, both of which will be positive for the economy, which would push interest rates up faster than they would be without those.”

The PMMS, for the week ending November 10, reflects pre-market conditions, according to Freddie Mac Chief Economist Sean Becketti—and as a result, the average 30-year FRM bumped up by 3 basis points to 3.57 percent, a five-month high. The average 15-year FRM rose by 4 basis points, up to 2.88 percent, from the previous week.

“On Wednesday, the 10-year Treasury yield closed above 2 percent, about 25 basis points higher than its pre-election value and its highest yield since January,” Becketti said. “At this point, it is too soon to tell whether Treasuries will hold this new level or if the mortgage rate will increase as much over the coming week.”

Bankrate.com’s weekly survey of large lenders indicated an increase of 4 basis points for the average 30-year FRM, from 3.69 to 3.73. According to Ten-X EVP Rick Sharga, “The market doesn't like uncertainty, and the market had a Clinton win baked into its forecasts.”

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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