Every four years, the U.S. holds a Presidential election in early November. The event captures the attention of just about every American for at least a few months, not to mention, the world.
That’s because the outcome can have a ripple effect and impact economic attitudes, outlooks, forecasts, and confidence within the United States and beyond. It’s a pretty important event to say the least, and rightly so.
However, what if a life situation, such as a new job or new member of the family, puts you in the market for a home during an election year? If you’re considering a major purchase during this time, you certainly might ask yourself:
“Do Presidential elections affect mortgage interest rates?”
The answer is yes—and no. When we look back at interest rates during Presidential election periods, as far back as the early 1970s, rates go both up and down. (Interesting side note: rates in the early 1980s were almost 15%! Compare that to the current rates of around 3-4%, and you might feel a little more confident about home financing in general.)
The bigger and better question to ask is: do Presidential elections affect the economy and more specifically, the real estate market? This answer to that question is a definitive “yes.”
Americans and their consumer behaviors are certainly affected by an election year. The reason? The most basic answer is that people are wary of change. When the placard in the Oval Office has a new name, especially if it flips from one political party to the next, there is inevitable change. People want to know if an administration’s new policies or tax incentives will have an affect on home values, and that can be a valid concern.
So when it comes to major purchases, many people tend to take a “wait and see approach” before signing any dotted lines. This holds especially true in housing, where home sales typically dip about 5% during an election year. Combine this with the fact that the real estate market itself usually tapers off in the months of October and November, simply due to normal seasonality. This seems to all add up, on paper, that home sales do indeed cool during an election year.
However, fear of change and holding off on big purchases really has no bearing on mortgage interest rates and home buying. In fact, hundreds of thousands of homes will be bought and sold every fall, in every year. The Presidential race can have a direct influence on the stock market, world trade markets, and consumer confidence, no doubt. But mortgage rates are mostly steady, take longer to react and tick up slowly even if they do rise.
Low Mortgage Interest Rates Look to Remain low
Mortgage interest rates have actually gone down, year after year, and have reached historic lows. And the good news is, they don’t appear to be going up anytime soon.
If it’s late summer or early fall and it’s an election year, you don’t have to hit “pause” on your dream of homeownership. For most middle class families, it’s still a keen time to buy or refinance and take advantage of historically low mortgage rates.
LoanFleet’s team of experienced loan officers can answer any of your questions and help you figure out if now is the right time for you to buy a home. We’ll guide you through every single step of the loan process and give you all the information you need to make a confident and informed decision.