No matter what side of the electorate you find yourself on, most of us can agree that the United States is approaching a transitional period. In times of transition, people can resort to a fight or flight mentality that occasionally reaches unneeded proportions (remember the Y2K craze? Guess y’all didn’t need to dig bomb shelters and stock up on canned goods after all). However, if you’re anticipating the coming election with some unease, it might help to consider how the election will affect the average mortgage rate.
I suggest this consideration might help because, historically, elections have not had dramatic effects on mortgage rates. Of course, there is always a certain level of uncertainty during election years that tends to affect the economy. By extension, there are often mortgage rate fluctuations during the time immediately following an election. Don’t let that prospect worry you, though: remember that mortgage rates are in a constant state of change, and a permanently stable mortgage rate would be strange. In that case, we shouldn’t view mortgage rate fluctuations during election season much differently than other mortgage rate fluctuations.
But don’t take my word for it; check out some examples of mortgage rate changes surrounding past election cycles:
- 1980 (Ronald Reagan vs. Jimmy Carter): Before this election, mortgage rates were about 14.21%. A month later, rates had risen to about 14.79%.
- 1988 (George H.W. Bush vs. Michael Dukakis): Prior to this election, mortgage rates were about 10.27%. After the election, mortgage rates had increased to 10.61%.
- 1996 (Bill Clinton vs. Bob Dole): Throughout this particular election season, mortgage rates fluctuated between about 7.65% and 7.82%.
- 2004 (George Bush vs. John Kerry): Prior to the election, mortgage rates were about 7.75%. Following the election, mortgage rates decreased to about 7.38%.
As you will note from the following statistics, mortgage rates certainly see changes during election periods. However, these changes are not massive. If anything, they represent the fairly standard changes that mortgage rates are going to go through anyways, election or not. Some of these changes might be slightly augmented due to the increased uncertainty surrounding an election, but, if so, the increase is not dramatic.
While we’re on this subject, it’s worth noting that the average mortgage rates of yore were significantly higher than our current rates. In 1980, some pretty serious inflation was happening, explaining the year’s nearly 15% rates (later on, rates would jump to over 18%). By contrast, as of October 20th the average 30-year FRM was about 3.52%, which is pretty obviously lower than 18%. Indeed, as you’ve read on this blog before, mortgage rates have occupied a historically low range for quite some time now, but don’t let that fact lull you into complacency: mortgage rates are expected to rise, especially as the economy continues to improve and stabilize. As such, since an increased mortgage rate adds substantially to the monthly cost of your home, capitalizing on low mortgage rates is a wise decision anyone could agree with, Republican or Democrat.
For advice on securing your low mortgage rate, contact Cody Touchette, MLO # 83216, Pickett Street’s preferred lender.