As we mentioned in “State of Rates,” rates increased sharply after Mr. Trump was elected.
In the shorter run, we can expect rates to remain where they are or to continue to edge higher, unless significant negative economic news surfaces. Longer term, rates are expected to rise, but we have seen this prediction dashed time and again. We are in a different world now, with much less ability to predict – the recent election and the market’s reaction are two great examples. In addition, markets often overreact nowadays, also as we mentioned above. So, it will not be surprising if rates come back down a little too.
As for mortgages overall, we can expect looser guidelines and controls, as a GOP controlled government is expected to try to loosen the effects of Dodd Frank and back off the CFPB. They may also try to break up Fannie and Freddie which would further free up lending guidelines.
While we will not return to the irrational pre-meltdown lending guidelines, we will hopefully see more “make-sense” underwriting and fewer irrational demands, if institutions are less paranoid about extreme regulatory scrutiny.
Final Note: This article focuses on mortgages only, and is not an endorsement of Trump or any other candidate or policy. We realize that there are many other factors that can affect the economy overall, and therefore also significantly affect the mortgage and housing arenas.
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