Mortgage rates hit another record low following election uncertainty
30-year fixed mortgage rate now at 2.87%
FOX Business’ Ashley Webster on mortgage rates and homebuyer activity.
Mortgage rates dipped to another record low for the twelfth time this year driven by ambiguity surrounding the election outcomes.
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According to Freddie Mac, the 30-year fixed mortgage averaged 2.78%, a drop of 3 basis points from the previous week. Even though the rates have slumped to record lows once every four weeks on average this year, the new slump highlights investors’ concerns over political uncertainty.
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However, mortgage rates tend to be unpredictable in the weeks after presidential elections, as reported by NerdWallet.
Freddie Mac data shows that rates have gone up, down and remained steady since the 2000 election between George W. Bush and Al Gore. The contested race saw a steady 30-year fixed-rate mortgage throughout November at a range of 7.73% to 7.79%, followed by a sharp decline with the outcome of the Supreme Court’s Bush v. Gore case. Rates moved up after Bush’s re-election in 2004, in addition to President Trump’s 2016 election and fell both times when President Obama seized the nomination.
And with potential gridlock among Congress should the GOP retain the Senate and the House maintain Democratic control, a hazy outlook on policy could further concern investors.
The 10-year Treasury note also fell to 0.778% following the current election, as mortgage rates are pegged to the trajectory of long-term bond yields. The uncertain results of the election have also triggered concern that a near-term stimulus package is unlikely, upping the demand for government bonds.
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“Benchmark 10-year Treasury yields have pulled back on the prospect with divided government,” chief financial analyst at Bankrate.com Greg McBride told FOX Business. “We will not see the type of stimulus or spending that would fuel higher inflation or power economic growth in a significant way. Mortgage rates, as a result, remain at record low levels.”
What is often seen as a less favorable economic outcome is typically indicative of lower mortgage rates, according to McBride.
Despite the unpredictability that has marked 2020, the housing market remains ripe. The consecutive series of low mortgage rates has juiced demand for refinancing.
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“Mortgage rates are still at record low levels, so the window of opportunity for homeowners to refinance remains wide open,” McBride said. “This can generate hundreds of dollars of savings each month and tens of thousands of dollars in savings over the life of the loan.”
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