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Melissa Cohn, the regional vice president at William Raveis Mortgage and a 40-year veteran of the mortgage industry, believes that the outcome of the election could have major impacts on interest rates, and therefore mortgage rates and home affordability.
“An election [can] affect mortgage rates if the programs and platforms that a candidate is running on are inflationary,” she said. “That can cause mortgage rates to go back up. Mortgage rates go up and down with the rate of inflation.”
Based on this correlation, here’s why Cohn believes a Donald Trump election win could cause mortgage rates to increase.
Trump’s Policies Are More Inflationary
Cohn believes that Trump’s policy proposals could mean higher levels of inflation.
“Trump has all of his tariffs and his isolationist policies that he would want to put into place, which would be inflationary in this country,” she said.
However, inflation could also potentially become worse under a Joe Biden presidency.
“Biden’s spending could be inflationary to this country,” Cohn warned.
Rates Have Been Decreasing Under Biden
Interest rates and mortgage rates have been decreasing during Biden’s presidency, so Cohn believes we would likely continue on this downward trajectory if Biden is re-elected.
“He’s the existing president, and we’re in a time period where the Fed is getting ready to start cutting rates, and Biden wouldn’t make any sweeping changes that could change that,” Cohn said. “Things would continue on the path that they’re going on now.”
Lower Rates Would Revive the Real Estate Market
With mortgage rates still high, the real estate market has remained stagnant. If rates continue to decrease under Biden, this could revive the real estate market.
“Lower rates are good for real estate values,” Cohn said. “When rates come down, more buyers come back into the marketplace and prices go up. When rates come down, more buyers come back into the marketplace and actually buy. Right now, real estate markets are very quiet as we remain in a high-rate environment, the Fed has not yet started to cut rates, and people are getting nervous about the election.”
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