This year’s presidential election is one of much debate. Opinions are strong and understandably so. Something somewhat lost in discussions about the election is mortgage rates and what may happen to them once the new president is elected. I thought it would be interesting to review the last 10 presidential elections and their impact on mortgage rates.
- 1976 – Jimmy Carter defeated Gerald Ford. Rates were at 8.81 percent before the election and 8.79 percent a month later.
- 1980 – Ronald Reagan defeated Jimmy Carter. Rates were at 14.21 percent and increased to 14.79 percent a month later. Rates went up to 18.45 percent a year later but this jump was more related to a staggering rate of inflation.
- 1984 – Ronald Reagan defeated Walter Mondale. Rates were 13.64 percent before the election and decreased to 13.18 percent a month later. Rates continued to drop to 9.32 percent resulting from an improved economy.
- 1988 – George H.W. Bush defeated Michael Dukakis. Rates were at 10.27 percent before the election and immediately jumped to 10.61 and stayed steady in that range long after.
- 1992 – Bill Clinton defeated George H.W. Bush. Rates stayed steady changing to 8.21 percent from 8.31 percent immediately following the election.
- 1996 – Bill Clinton defeated Bob Dole. The range of rates during this election was 7.65 to 7.82 percent and eventually steadily decreased over Clinton’s second term.
- 2000 – George W. Bush defeated Al Gore. Interest rates remained virtually unchanged from 5.73 to 5.75 percent.
- 2004 – George W. Bush defeated John Kerry. Interest rates decreased from 7.75 percent to 7.38 percent over the month following the election.
- 2008 – Barack Obama defeated John McCain. Interest rates dropped from 6.09 percent to 5.29 percent within one month following the election but this was towards the beginning of the market crash.
- 2012 – Barack Obama defeated Mitt Romney. Interest rates were at and maintained historic lows at 3.35 percent. Economic factors were at play as the government was still buying mortgage-backed securities.
This year’s election may prove to be different, but as you can see over the past 10 elections there has been very little effect on mortgage rates following election results. You could certainly argue that a president serving two terms has a longer period to implement economic policies that could result in long-term rate changes. However, overall there is very little difference on the effect on mortgage rates between Republican and Democratic victories..
Rates are forecasted to stay low for a while. Some sources are projecting rates to be similar in late 2017 to present day with inflation being the mitigating factor. There won’t be much of an increase unless inflation rates increase quicker than forecasted.
I believe you can have confidence that rates will be advantageous for several months into the future. That said, don’t let that confidence create procrastination. Plan without delaying the future. Every 0.25 percent difference in a mortgage rate could result in a 3 percent payment difference. That’s significant.
This weekly Sponsored Column is written by Mike Miles of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268