Democratic Control Of The Presidency And Congress Could Impact Mortgage Rates

joe biden

After Congress affirmed Joe Biden’s presidential victory and Democrats flipped the Senate this week, the 10-year Treasury yield climbed 4 basis points to 1.08% on Thursday. This is up from 1.04% on Wednesday—the first time since March 19 that 10-year yields broke 1%.

With Democrats at the helm of both the White House and Congress, investors are anticipating additional fiscal stimulus, putting upward pressure on yields (which increase as bond prices decrease). Bonds are considered safe-haven assets, but with renewed optimism in the economy, investors are turning to U.S. stock futures.

Mortgage rates usually run in lockstep with yields, so when yields rise mortgage rates often follow.

“Now that the Democrats have 51 votes, we’ll have a stimulus, which is why you’re seeing the sudden rise in yields,” says Logan Mohtashami, a housing data analyst at HousingWire.

Mortgage Rates Likely to Rise

Assuming the coronavirus vaccine eventually helps control the spread of Covid-19 and the economy gains strength, borrowers should expect mortgage rates to rise. The Mortgage Bankers Association predicts the 10-year Treasury yield will jump 1.4% by the fourth quarter of 2021, with average rates on the 30-year fixed rate mortgage hitting 3.2% by the third quarter of this year and remaining there until 2022.

Mohtashami says higher rates are good in an overheated market such as this one, as they will help to stabilize home prices. Because “low rates are a big driver of homebuying,” making mortgages a little more expensive will help cool rising prices and give first-time homebuyers more breathing room.

Homebuyers who want to lock in today’s sub-3% rates should shop for a lender now. You can lock in your rate, which will help protect you in case interest rates increase while you shop for a house. Winter is usually a slower time in the real estate market, so the chances of finding houses with lower prices are better now than if you wait until spring when the market usually picks up the pace.

Rising rates are bad news for homeowners hoping to refinance their mortgage in 2021. While there’s no guarantee rates will rise, the signs point to upward movement.

Currently, however, rates are hovering near record lows, around 2.65%, according to Freddie Mac. So waiting for rates to drop lower might be a sour bet. If you’re not sure whether refinancing makes sense, use a refinance calculator to get an idea of how much you can potentially save based on current interest rates.

Refinancing comes with closing costs, which can run between 2% and over 6% of your loan amount, so it’s important to factor this in when you’re crunching numbers. The longer you plan to stay in the home, the more time you have to make up those closing costs and start seeing the savings.

If you’re ready to refinance, start shopping around. Find out which lenders offer the lowest rates and closing costs so that you can maximize your savings. Some lenders offer customer discounts, as well as discounts for members of the military or certain professions, like teachers. Every little bit helps, so ask your lender about discount programs.

Source: https://www.forbes.com/advisor/mortgages/democrats-mortgage-rates/

RSS Latest Press Release

  • Choosing the ‘Bestway’ is the Only Way for All Your Plumbing Needs!
    Forney, TX – Whether it is a leaking tap or the need to urgently clear blocked drains, Bestway Plumbing is the preferred choice for many clients, thanks to their world-class professional services.   Bestway Plumbing has been a central fixture of Forney and the surrounding Dallas County neighborhoods of Heath, Rockwall, Plano, and Frisco since it was […]
  • SharpBunnies Official Website is Now Live, Read Everything About SharpBunnies
    The website of SharpBunnies (NFT) is now live with up-to-date information about the project and other useful details about the project, NFTs, their features and various benefits.Those who are planning to participate in Sharp Bunnies NFT minting are advised to read the details on the website, as we have included many crucial updates as well as a […]
  • European Removal Services – An Experienced Removal Specialist Moves Families and Businesses to and From Europe
    United Kingdom, 14 January 2022: European Removal Services is an experienced removal specialist that moves families and businesses to and from Europe, along with several international destinations. They have more than 30 years of experience in moving families and businesses. They have helped thousands of families and businesses with their removals to Europe and from […]
  • Simply Plumbing & Sewer Offers Comprehensive Solutions to Your Plumbing Issues
    Hempstead, TX – When you have a leak or blocked drains, time is of the essence to achieve a rapid and correct solution. Among the best Cypress plumbers, Simply Plumbing & Sewer is the preferred choice for residential clients because of its exceptional customer service.   Led by its founder Wesley Courville, Simply Plumbing & Sewer […]