Elections affect interest rates and here is how
Elections Vs. Rates: What's going on?
I've been in this business a long time and I've seen a trend with big elections like the midterms coming up! So, what usually happens during and after elections? I've seen enough to tell you that rates will slightly drop during these key times - in fact, they already have slightly dipped below 7%! And I think they're going to hold for a bit! I also want to shed some light on some historic data from the Primary Mortgage Market Survey from Freddie Mac which dates back to 1971, we can all gain some insight on these trends.
Take a look at the history of mortgage rates:
1972 – Richard Nixon won in a landslide victory over George McGovern. Prior to the election the rate was 7.43% and it increased slightly to 7.44% in December.
1976 – Jimmy Carter won over Gerald Ford. Prior to the election the rate was 8.81% and it declined to 8.79% in December.
1980 – Ronald Reagan defeated Jimmy Carter. Prior to the election the rate was 14.21% and it increased to 14.79% in December.
1984 – Ronald Reagan ran for a second time and defeated Walter Mondale. Prior to the election the rate was 13.64% and in December it declined slightly to 13.18%.
1988 – George H. Bush defeated Michael Dukakis. Prior to the election the rate was 10.27% and in December it rose to 10.61%.
1992 - Bill Clinton defeated George H. Bush. Prior to the election the rate was 8.31% and a month later it decreased to 8.21%.
1996 – Bill Clinton defeated Bob Dole. Prior to the election the rate was 7.62% and it decreased to 7.60% in December.
2000 – George W. Bush defeated Al Gore. Prior to the election the rate was 7.75% and it fell slightly to 7.38% in December.
2004 – George W. Bush defeated John Kerry. Prior to the election the rate was 5.73% and it increased slightly to 5.75% in December.
2008 – Barack Obama defeated John McCain. Prior to the election the rate was 6.09% and decreased to 5.09% in December.
2012 – Barack Obama defeated Mitt Romney. Prior to the election the rate was 3.38% and decreased slightly to 3.31% in December.
2016 – Donald Trump defeated Hillary Clinton. The rate spiked toward a two-year high to 3.95%
So, what now?
Despite the fear most people have that interest rates will rise dramatically after an election; this is not the case. In general, interest rates change according to the state of the economy. Right now, interest rates are slightly lower!
Take a deep breath and get clear about your goals.
I HIGHLY suggest you simply stay up-to-date and make sure you know your options. These low interest windows don't last long, so act now!
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