President-elect Donald Trump’s victory has accelerated the rise in the US 10-year Treasury yield. Mortgage interest rates, which slowly follow the standard yield, are also rising.
The average interest rate on a 30-year fixed mortgage rose 9 basis points to 7.13% Wednesday, according to Mortgage News Daily. This is the highest level since July 1 of this year, but it was not the sharp jump that some had expected.
“The expectation among bond traders leading up to the election was that a Trump victory, especially in the event of a red sweep, would cause interest rates to rise.The latter is not yet clear, but the former would add to the already elevated interest rates. That’s enough to push it further.” Trump’s chances of victory have suddenly increased,” said Matthew Graham, chief operating officer of Mortgage News Daily.
Housing stocks also responded, with major public construction companies and building materials companies both plummeting. lenner DR Horton and pluto group Both stocks were down more than 4% in midday trading Wednesday. retailer home depot and lowe’s Both fell more than 3%.
“Construction stocks are very sensitive to mortgage rates and mortgage rate expectations,” said John Barnes, CEO of John Barnes Real Estate Consulting. It is having an impact,” he said.
President Trump did not offer a detailed housing plan, but he did talk about deregulation and freeing up federal land for more housing construction.
The National Association of Home Builders congratulated the president-elect in a statement from President Carl Harris, saying, “NAHB is committed to working with the incoming Trump administration and Congressional leaders of both parties to enact legislation and regulations that promote housing. I’m looking forward to it.” The challenge is to increase the country’s housing supply and alleviate the problem of housing prices for the people. ”
Big construction companies have been buying up mortgage interest rates for their customers, which is squeezing profits.
Mortgage rates hit a recent low of 6.11% on September 11th, but have steadily risen since then despite recent rate cuts by the Federal Reserve. Mortgage rates do not follow the Fed, but they do respond to the central bank’s views on the economy. Better-than-expected economic reports in September and October pushed up bond yields and, as a result, mortgage rates.
For consumers, if a homebuyer purchases a $400,000 home with a 20% down payment on a 30-year fixed mortgage, the monthly payment in early September would be $1,941. Your current payment would be $2,157, a difference of $216.
This fall, sales of used homes showed an unprecedented surge. Pending sales, which represent signed contracts, increased 7% in September compared to August, according to the National Association of Realtors. That was before interest rates rose significantly.
The increase in sales was primarily due to an increase in supply. According to Realtor.com, homes actively sold in October increased 29.2% compared to October 2023, reaching the highest level of active inventory since December 2019.
“No one knows the path forward, but ultimately it will be determined by inflation, the economy and Treasury issuance,” Graham added.
