The coronavirus pandemic affected how we live and work. It also had a significant impact on personal finances, the housing market, and mortgage rates. The Fed cut short-term interest rates to record lows in the spring to support the economy. Since then, demand for new mortgages and refinances has surged.
In the first week of January 2020, the interest rate on a 30-year fixed-rate mortgage was 3.72%. In the third week of November 2020, interest rates on the same 30-year fixed-rate mortgage were 2.72%. One percentage point can make a sizable difference in a borrower’s monthly payments and the overall cost of a mortgage loan.
But will the 2020 presidential election impact mortgage rates in 2021? Will the outcome cause mortgage rates to rise, like in 2016? President Trump’s administration said it wouldn’t change FHA mortgage insurance rates. But under President-elect Joe Biden, that could change.
Will Biden’s inauguration affect mortgage rates?
In 2016, it was forecast by the Home Buying Institute that 2017 mortgage rates would gradually rise to above 5%, post-inauguration of President Trump. What happened was just the opposite.
That same forecast model predicts the average mortgage rate will be around 3% in 2021.
If you’re considering refinancing your mortgage or you’re looking to take out a mortgage, use a multi-lender marketplace like Credible. Credible’s free online tool allows you to compare rates from multiple mortgage lenders so you can save money and time. Get prequalified rates in just three minutes.
3 REASONS TO REFINANCE YOUR MORTGAGE IMMEDIATELY
Financial planner and co-owner of InvestingSimple, Ed Canty, contended, “As we move into the first quarter of 2021, the odds are that low-interest rates will continue to be a trend. Post-inauguration, the Federal Reserve has indicated that they will leave interest rates low for the foreseeable future.”
Even with further fiscal stimulus within the U.S. and a push for economic growth, there’s a high chance interest rates won’t tick up until late 2021 or 2022. Canty further stated, “If the economic recovery from the Covid-19 pandemic is strong, then above-average economic growth will put upward pressure on interest rates.”
With mortgage rates hovering around or below 3%, existing homeowners may want to consider refinancing their mortgages to lower their monthly payments, get a better loan term, and hopefully cut the life of their loans. Credible can walk you through the application process (entirely online).
What about post-inauguration?
“Inflation is also a factor to consider in the coming years,” Canty added. “With a significant increase in the money supply from the Federal Reserve in 2020, eventual increases in inflation could drive up mortgage rates. Also, if the demand for new loans and refinances stays strong, then that could also push interest rates higher.“
Although historical data is a strong indicator of the rise and fall of mortgage rates, no matter who is ultimately elected, it seems mortgage rates aren’t expected to rise. COVID still presents too big a risk to the economy to do that.
If you’re thinking about taking advantage of the lowest interest rates in years, check out Credible to compare lenders and mortgage rates.
WHY IT’S A GOOD IDEA TO REFINANCE YOUR MORTGAGE WHILE RATES ARE LOW
Did the 2020 election results affect mortgage rates?
Benjamin Schandelson, a loan originator at MJS Financial LLC, a small mortgage brokerage located in Boca Raton, Florida, speculated on the impact of the election. “I believe that this election and the inauguration of the new president will have minimal impact on mortgage rates, which will stay low and continue to ride the trend they are on right now through the end of 2021.”
Schandelson went on to say, “Presidents get too much blame for fluctuations in mortgage rates. Presidential elections also have little impact on mortgage rates. What may have an impact on rates in the future are COVID responses and vaccines. If a working vaccine comes out, and people go back to work and begin drawing a decent salary, we might see an increase in mortgage rates to reflect increased spending.”
With Credible, you can get actual prequalified rates – not estimates – within just three minutes without any effect on your credit score. Just tell Credible a little about you to get started.
HOW TO GET THE BEST MORTGAGE REFINANCE RATES
Before election day, hundreds of lawsuits were filed on both sides of the aisle. Most of them dealt with changes to how the election process would work because of COVID-19. After the election, President Trump’s campaign began contesting some results and exercising legal options (over voter fraud) in battleground states. But will the onslaught of lawsuits move mortgage rates up or down?
While interest rates are holding steady at all-time lows, explore all of your mortgage options by visiting Credible to compare rates and lenders.
HOW TO GET A MORTGAGE RATE BELOW 3%
Predicting what will happen to mortgage rates over market turmoil caused by President Trump’s lawsuits involves a great deal of “ifs” and “maybes.” Mortgage rates may be impacted negatively, positively, or not at all. To date, mortgage rates have remained steady and show no signs of increasing.