The election is over….
What does that mean for home buyers going forward? I have been watching the stock market and the reaction after the election was very unexpected. The media hyped that if Donald Trump won, the stock market would surely drop due to uncertainty. However, it seems that Trump’s election caused just the opposite effect. The stock markets reacted positively to Trump’s win. The Dow Jones Industrial average has hit an all time high and stocks opened higher on Monday almost a week after the election.
However, mortgage interest rates are on the rise. The interest rate on government bonds, which directly impacts mortgage rates, soared, with 10-year Treasury yields jumping to 2.23 percent on Monday, up from 1.88 percent on Nov 8. The rise represented the market’s response to expectations of Trump’s $1 trillion, 10-year fiscal stimulus plan per an article published today on IBTimes.
Last week, my curiosity caused me to reach out to several lenders to get their thoughts, as we watched interest rates pop up in a knee jerk reaction to the election. Sites like Bankrate.com have reported that the benchmark 30 year fixed rate mortgage rose 4 basis points to 3.73% and the benchmark 15 year fixed rate mortgage rose 1 basis point to 2.97 percent. The Federal Reserve is going to meet in December and a rate hike is still on the table.
What does that mean for you? Well your buying power is rapidly shrinking. The higher rates go, the less “house for the money” you get. Mark Ferguson with MVB Mortgage said “a 3% interest rate is likely a thing of the past. We may not see that again for a long, long time”.
I do believe that rates are now organically on the rise and the Fed will do it’s job in December. They will determine if our economy is strong enough to sustain another rate hike. Whether they raise rates or not, rates are higher than they were. We are seeing them buoy on a daily basis. If you want a rate under 4%, now is the time move. Home prices are still reasonably low, but housing inventory is also at an all time low. As demand for housing rises, so will prices.
Thousands of new jobs will come to the Washington DC Area with a new administration. I expect a brisk and busy Spring market 2017. Hold onto your hat!
Kelly Gaitten is one of the top producing real estate agents in Loudoun County Virginia for more than 10 years. Whether you are interested in listing your home for sale, or buying a home in Loudoun County or Northern Virginia, Kelly is eager to serve you.