As Trump’s victory over Democratic candidate Vice President Kamala Harris became apparent on Wednesday, bond markets reacted sharply. The benchmark 10-year Treasury yield jumped to 4.479%, its highest level since July, according to news reports. Mortgage rates responded in kind, with the average 30-year fixed rate rising to 7.13% on Wednesday, up nine basis points from the day prior, according to rate data from Mortgage News Daily.
Investors offloaded U.S. Treasuries in anticipation that Trump’s proposal for higher tariffs on imports will eventually push consumer prices—and consequently, inflation—higher.
Americans should expect more of the same market volatility and affordability challenges in the housing market as Trump takes office, Lisa Sturtevant, chief economist with Bright MLS, said in a statement.
“Over the longer term, homeownership could become harder to attain for first-time and moderate-income homebuyers as his policies favor high-income individuals and existing homeowners,” Sturtevant said. “Trump’s fiscal policies can be expected to lead to rising and more unpredictable mortgage rates through the end of this year and into 2025.”
Trump’s proposed fiscal plan would add $7.75 trillion to the federal deficit over the next decade compared to Harris’ $3.95 trillion plan, according to estimates from the Committee for a Responsible Federal Budget, a nonpartisan group. Trump has touted that he’ll impose tariffs, a move economists warn will widen the deficit gap and reverse the Federal Reserve’s hard-fought progress on taming inflation.
Some of Trump’s proposals could have direct implications for housing, making it harder and costlier to buy a home, Sturtevant said.
“His mass deportation proposal would have a chilling effect on the construction industry, shrinking the already constrained labor force and stalling badly needed new housing construction,” she pointed out. “At the same time, proposed tariffs will increase building costs. Limited inventory will keep home prices high and will continue to sideline many first-time buyers.”
Dr. Selma Hepp, chief economist with CoreLogic, said a Trump administration will usher in a new era of de-regulation for the housing industry, without specifically projecting what the larger effect would be on sales or affordability.
“This could potentially mean rezoning federal lands to build homes for would-be first-time homebuyers,” Hepp said in a statement. “Nevertheless, with affordability and high mortgage rates remaining a huge challenge for potential homebuyers, it is not clear yet which of his policies would help provide relief, particularly given that rates are expected to remain higher under the ‘red sweep’ with tariffs and deportations adding to inflation pressures.”
Hepp added, “However, extended tax cuts and additional incentives, such as a homebuyer tax credit and/or down payment assistance, may also be in the cards for this next Trump presidency.”
Anthony Lamacchia, broker/owner and CEO of Lamacchia Realty in Massachusetts, said in a video released the day after the election he expects consumers in Democratic blue states to be “frustrated” enough with the result that they put off buying or selling for at least a few weeks.
“Then, come January, you will see sales and activity take off like a jet. Every single time there is a presidential election, the following January is very busy. I expect this one to be no different,” he said.
Meanwhile, industry groups are looking ahead to work with the new administration on tackling housing affordability and other key issues.
The Community Home Lenders of America (CHLA), a trade group representing small and mid-sized independent mortgage banks (IMBs), said in a congratulatory statement that it wants to partner with the president-elect “on the critical goal of creating accessible and affordable housing for borrowers—particularly those who are first-time and low- to moderate-income.”
In addition to its advocacy work on behalf of IMBs, CHLA said it remains focused on reducing third-party service provider costs (especially FICO credit score fees), eliminating trigger leads, advocating for ways to improve housing affordability and proposing “comprehensive and effective GSE reform.”
Ahead of the November 5 election, the Mortgage Bankers Association (MBA) was prepared for a divided government and legislative gridlock, MBA President and CEO Bob Broeksmit told members at the trade group’s annual meeting in Denver last week.
“We know how to stop bad ideas, or at least make them better,” Broeksmit said in prepared remarks at the MBA gathering. “And we’re always ready to push for good policies that enable you to do more for Americans.”
He noted that the MBA has forged strong working relationships with Congress, the White House and the Federal Housing Finance Agency (FHFA) to successfully counter allegedly harmful regulatory rules, namely the FHFA’s Suspended Counterparty rule and the Basel III Endgame proposal.
Looking ahead, Broeksmit said the MBA would focus on working with either administration to tackle housing affordability. This includes the tax benefits in the 2017 Tax Cuts and Jobs Act, which will expire in 2025 unless Congress extends it.
“As the tax debate ramps up, we’ll keep telling lawmakers that Americans need to keep more of their take-home pay,” Broeksmit said. “If we truly want to help more Americans find affordable housing, the last thing we should do is raise their taxes.”
Additionally, Broeksmit called for the next administration to hire a national housing director “to bring order to this mess,” referring to contradictory and “stifling” federal housing policies.
“Ultimately, the Housing Director would stop agencies from stifling us, and start the long overdue process of empowering us to help even more Americans. This is the kind of thought leadership that we bring to bear in our nation’s capital. And we’ll continue to push for good ideas to become realities,” he told attendees.
Funny I never heard Kamala HArris outline her plan other than saying hers would be an opportunity economy! Somebody forgot to tell her that we alwys are in an opportunity economy as there are always opportunities but you have work to take advantage of them . Biden Harris economy and policies were a disaster and will take years to fix just as Obamas damage to the USA and to out military