Despite voicing their favor towards Donald Trump over Kamala Harris, the real estate industry may still see a struggle in customer purchasing power with the new president's fiscal policies.
It's worth noting that prior to Trump's win, mortgage rates were already on the rise since investors are predicting higher rates due to the policies he has promised.
While Trump campaigned on making homeownership more affordable, economics believe it could push mortgage rates up instead. According to AP News, these rates, which determine how much people pay monthly on home loans, are currently heavily influenced by the 10-year Treasury bond yields of the US.
These yields have recently risen, even after the Federal Reserve decided to cut interest rates. As a response, this pushed mortgage rates to 6.79% for a 30-year loan. Trump plans to include cutting taxes, imposing tariffs, and reducing government regulations, all of which are expected to add to inflation and increase the national debt, which can also affect mortgage rates.
Homebuyers Under Trump's Second Term
A higher mortgage rate is a problem for first-time homebuyers since they will continue to struggle to afford a home. In fact, VCPost earlier reported that fewer people are able to buy homes now than in the previous years and the percentage of them has dropped to a historic law.
This implies that for those hoping to buy a home, the higher mortgage could add hundreds of dollars to their monthly payments, coupled with record-high home prices. Under Trump's second term, more Americans will opt to rent an affordable tiny home than to afford one despite the US jobs rate seeing improvements over these past few months.
For now, the upcoming Trump administration will still act on their promise to make homeownership more affordable, but the reality will still be different based on the analysis of top economists.
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