The election is over, and for Donald Trump and his transition team the work creating a new administration has begun. And the press is following every event. JMAC and our brokers are primarily focused on the regulatory and economic developments. As for economic policy, we will need to wait and see what is hammered out between the Trump Administration and the new Congress beginning in January. Expectations are for lower tax rates and unwinding some/many of the regulations put on various industries during the Obama Administration. Whether those will come to pass and their long-term effect on the economy will certainly impact mortgage rates, however there is tremendous lag time between initiating policy, getting anything through the legislative process, implementing the policy and then the impact that any policy changes may have on the economy.
Many were surprised by rates shooting higher in the days after the election. JMAC’s management was not. Markets, and people, don’t like uncertainty, and the stock and bond markets are trading off Mr. Trump’s previously stated economic policy proposals. Investors feel the new administration will be more business friendly with tax cuts, deregulation, and higher defense spending. But interest rates moved higher because President-elect Trump has promised to impose tariffs and deliver a $1 trillion infrastructure spending package, both of which could increase the Federal deficit, and ultimately drive up inflation.
Even with the bump in rates last week JMAC’s brokers know they are still extremely low and a bright spot for home buyers could be a lull in the market presenting some soft targets for sellers who are in a need to sell for whatever reason and suddenly seeing a reduction of buyers in the market. A borrower may pay a bit more in rate than a week ago but possibly could pay a bit less in home price.