When that big change happens at the White House on inauguration day, Jan. 20, what’ll it mean for Boston condo owners — and the mortgage rates used to finance them?
As the country entered 2020, 30-year fixed-rate home loans were averaging 3.72%. Since then, mortgage rates have hit historic lows 16 times, according to the popular weekly survey from mortgage company Freddie Mac. Rates ended the year at a breathtakingly low average of 2.67%
Prospective downtown Boston condo buyers, and Boston condo owners who still need to refinance to lower rates, will be searching for any clues on where mortgage rates may be heading once Joe Biden is president.
Will rates go higher under Biden?
Don’t expect rates to budge the moment he takes the oath of office, but a Biden administration could eventually impact the direction of mortgage rates.
Here are how some mortgage experts predictions:
Guy Baker, founder of Wealth Teams Alliance,
“Expect tax rates to rise, the Fed to offset increasing inflation with higher rates, and the economy to slow,”
And there’s this, from Rick Sharga, executive vice president at RealtyTrac:
“Biden has called for more government investment in affordable housing, which could be funded in part by proceeds from fees attached to home sales backed by government agencies like Fannie Mae, Freddie Mac, and the FHA.”
Baker, Sharga and other experts polled by The Mortgage Reports:
30-year rates would rise to an average 3.51% in 2021 under a Biden administration.
Boston Real Estate and the Bottom Line
But presidents only have so much influence over mortgage rates — the coronavirus pandemic was the main driver of sinking rates in 2020. Just how well the country can contain the out-of-control virus before securing enough vaccine will dictate rates after Biden takes office.
If the COVID crisis takes another bad turn, investors could pull money out of stocks and pour it into Treasury bonds as a safe haven. That would cause the yields (interest) on Treasuries to sink, and mortgage rates usually following the same path.