Rates Rise As Election Impacts Treasurys, Housing Stocks

Mortgage rates ticked up again last week and are projected to keep rising now that Trump has been voted back into office.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.79%, up from 6.72% the week prior.

This is the sixth consecutive week of increases, and measures the days leading up to the election.

A year ago at this time, the 30-year fixed-rate mortgage averaged 7.50%.

Fifteen-year rates also rose, thought just slightly, up to 6% from 5.99%. A year ago at this time, they were at 6.81%.

“It is clear purchase demand is very sensitive to mortgage rates in the current market environment. As soon as rates began to rise in early October, purchase applications fell and over the last month have declined 10%,” said Sam Khater, Freddie Mac’s Chief Economist. 

A week ago, Americans were waiting for the FOMC and the election before making purchase decisions. Now, Donald Trump has won the presidency and upward pressure on rates is likely.

Trump’s election led to a surge in the 10-year Treasury yield, which in turn bumped the 30-year fixed mortgage up 9 bps to 7.13% on Wednesday.

As a result, housing stocks plummeted. Homebuilders Lennar, D.R. Horton and PulteGroup were all down, and retailers Home Depot and Lowe’s also saw declines.

“The builder stocks are highly sensitive to mortgage rates and mortgage rate expectations. Inflation expectations are higher now, which impacts long-term rates,” John Burns, CEO of John Burns Real Estate Consulting, told CNBC.

Analysts say Trump’s win reflects voters’ lack of interest in housing issues. While Kamala Harris’s housing policies were divisive, she did outline ideas for boosting affordability. 

Trump barely touched the housing issue, and his “America First” policies are more likely to inflate shelter costs than suppress them.