Mortgage Rates Edge Lower as Financial Markets React to Trump’s Cabinet Picks

Mortgage Rates Edge Lower as Financial Markets React to Trump’s Cabinet Picks

Mortgage rates witnessed minimal changes this week as investors awaited clarity on President-elect Donald Trump’s economic policies. The average 30-year mortgage rate declined slightly to 6.81% from 6.84% the previous week, remaining within the 6.8% range for the fourth consecutive week. In contrast, the 15-year mortgage rate increased to 6.1% from 6.02% a week prior. “Rates have displayed relative stability over the past few weeks as the market anticipates further clarification on specific economic policies,” remarked Sam Khater, Freddie Mac’s chief economist.

Treasury Yields Fluctuate After Trump’s Cabinet Appointments

The appointment of hedge fund manager Scott Bessent to lead the Treasury Department had a significant impact on 10-year Treasury yields, which closely align with mortgage rates. Yields initially declined sharply after the announcement, with Bessent being viewed as a potential moderating force against Trump’s proposed economic policies. However, yields experienced volatility, rising following Trump’s pledge to impose tariffs on imports from Mexico, Canada, and China. Nevertheless, yields returned to pre-election levels on Wednesday morning.

Inflationary Concerns and Interest Rates

Policies such as tariffs and tax cuts, as outlined by Trump, are widely perceived as inflationary, potentially requiring higher interest rates for an extended period to mitigate economic overheating.

Resilient Housing Market Despite Rising Mortgage Rates

Despite the rise in mortgage rates since late September, housing market activity has demonstrated resilience. Pending home sales, an indicator of housing contract activity, surged by 2% in October compared to the previous month. Mortgage applications have also exhibited an upward trend in recent weeks.