Thus far (among other things) the Trump presidency has been marked by a booming stock market, something that hasn’t boded well for mortgage rates. For the most part we’ve seen an increase in rates over the past several months. As of yesterday however, they tracked lower for the 7th day in a row marking new lows for the month. This deviation in trend coupled with the impending health care vote make now a great time to check in on how the Trump administration is impacting mortgage rates.
While it may seem counterintuitive, the recent down trend in mortgage rates is due largely in part to last week’s Fed decision to raise interest rates by 0.25. The resulting activity in the bond market was driven by relief that the Fed outlook wasn’t as aggressive or accelerated as initially anticipated. With the House of Representatives slated to vote on Trump’s proposed health care bill either evening or tomorrow morning this could all change.
Many are expecting a ‘knee-jerk’ reaction in the stock and bond markets once the vote is finalized because this marks a pivotal moment for the new administration. Investors will be looking to the results of this vote as an indication of whether or not the President will be able to see his pro-business, pro-economic agenda to fruition.
If the bill passes in the House of Representatives, it is possible and even likely there will be a negative reaction in the bond market resulting in increasing mortgage rates as investors will continue to invest heavily in the stock market. Should the bill not pass or should a no vote ensue, many investors are likely to see this as an indication that the Trump administration may not be able to accomplish what it has set out to do. In which case investors may seek safer waters in the bond market, meaning the recent downward trend in mortgage rates would likely continue.
Unfortunately, as we’ve seen with the results of Brexit and this year’s Presidential election, it’s difficult to predict what may happen with this looming vote. Most media outlets are reporting it is unlikely the bill will pass, however earlier today White House Press Secretary Sean Spicer addressed the press in a live briefing stating with conviction (a.k.a very aggressively) that the bill will pass. If it does pass, look for mortgage rates to rise, and rise quickly.