The truth about the upcoming election and its correlation to mortgage interest rate predictions
As November 8th approaches all of our calendars, there is probably much more on our minds than just thinking about who is going to lead our country. With the election as the main topic of many conversations, it is no surprise if you are questioning what may happen to mortgage rates and predictions following certain investment trends.
There is nothing set in stone saying that an election year alters (or drops) mortgage interest rates. However, according to a recent article published by BeSmartee that takes a look at previous years, there is a correlation between elections and the direction of mortgage interest rates.
Typically speaking, while still taking into consideration inflation and economic stability, such as unemployment, elections do influence mortgage interest rates. This may not be the case with every election, but for the most part, this statistic seems to hold true. Looking back all the way to the 1976 election between Carter and Ford, through the most recent election with Obama, it has been recorded that during an election year, mortgage interest rates generally do drop.
Take a look at what the trend has been for election in the past
1972 Election: When Richard Nixon took office with a landslide win, interest rates dropped from about 7.60 percent to 7.30 percent.
1976 Election: Carter beat out Ford in 76 and the US saw interest rates that had been at 8.81 percent drop to 8.79 percent. Not much, but it did drop.
1980 Election: This election year interest rates actually increased from 14.21 percent to around 14.79 percent when Reagan took office.
1984 Election: The interest rates were more stable in 84, and while Reagan won for a second term., interest rates still dropped from about 13.64 percent to 13.18 percent.
1988 Election: When Bush was elected, interest rates were holding at 10.27 percent and rose to 10.61 percent after the election.
1992 Election: By the time Clinton took office in 92, rates were back down to 8.8 percent and rose to 9.2 percent following his win.
1996 Election: Interest rates continued to rise in 96 when Clinton took his second term going from 7.6 percent to 7.82 percent. It is important to note, though, that rates did drop again in February to 7.65 percent.
2000 Election: When George Bush won interest rates barely changed at all going from 5.73 to 5.75 percent.
2004 Election: Interest rates fell from 7.75 percent to 7.38 after Bush won for the second time.
2008 Election: When Obama took office in 2008, interest rates stood at 6.09 and dropped to 5.29 almost immediately after.
2012 Election: Interest rates were at an all-time low, going from 3.6 percent to 3.35 percent when Obama was elected for his second term in a row.
You can see for yourself the connection between elections and interest rates, but many times it can be hard to tell the true difference. It may be more accurate to say that what plays a more significant factor in determining mortgage rates, is likely the US economy as a whole.
So now what?
Whether you are looking for a new home as an investment or you are thinking about refinancing, all that you need to worry about is when the best time to do so is. The important thing to take away from this blog is that the rate at which mortgage interest rates drop is not significant enough to really notice a difference. For an honest indicator of when to buy, you can count on Market Alert and our services. For more information about how we can help you, visit our system page and learn how we can help you.