US Mortgage Rates Flat as Trump’s Second Term Nears

Mortgage rates have experienced a momentary pause in their upward trajectory this week, as financial markets recalibrate in response to the prospect of a second Trump presidency. According to data from Freddie Mac, the average 30-year mortgage rate remained virtually static at 6.78% for the week ending Wednesday, a slight decline from 6.79% the previous week. Similarly, the average 15-year mortgage rate mirrored this trend, settling at 5.99%, down from 6% a week prior.

In the wake of President-elect Donald Trump’s electoral victory, 10-year Treasury yields—often seen as a bellwether for mortgage rates—exhibited an immediate uptick. This movement suggests that traders are bracing for potential taxation and spending policies that could necessitate prolonged higher interest rates. Interestingly, the Federal Reserve's recent 25 basis point reduction in benchmark interest rates had a negligible impact on mortgage rates, primarily because this move was largely anticipated by market participants. It is crucial to note that mortgage rates do not respond directly to the Fed’s adjustments; rather, they are more influenced by prevailing expectations regarding the central bank's future actions.

Market speculation is now focused on the Fed's potential maneuvers in December, with over 76% of traders currently forecasting an additional 25 basis point cut next month, as per CME FedWatch data. Despite mortgage rates lingering in the high-6% range, there has been a 2% increase in applications for new home purchases compared to the previous week, effectively breaking a streak of several weeks of decline, as reported by the Mortgage Bankers Association. This resurgence in applications can be attributed, in part, to the allure of FHA and VA loans, which typically offer lower interest rates than conventional mortgages. Conversely, refinancing applications have once again dipped, reaching their lowest levels since May 2024, leaving many to ponder the future landscape of mortgage financing in an ever-evolving economic environment.