Breaking Out The Crystal Ball For Interest Rates Under Trump’s Watch

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Real Estate Broker/Owner with Kolsky Realty & Management 01311273
https://activerain.com/droplet/4Xrx

 

Breaking Out The Crystal Ball For Interest Rates Under Trump’s Watch

 

 

Will interest rates continue to go up or is this just and unexpected reaction to Donald winning the election?

 

No crystal ball needed when reporting that mortgage rates have been on an upward trend for the past few weeks. But the crystal ball shows that we can expect to see a tiny continual gradual increase with some tiny gradual decreases in between over the next quarter. 

 

Here’s the deal. The 30 year fixed mortgage interest rates had been as low as 2.75%, and recently they have been about 3.5%, and yes, they now are hovering just over 4%, but my crystal ball says they won't continue to rise. In fact, my crystal ball says rates might even drop again. My crystal ball says, for the time being, we can expect about 4% for the next several months to be the new norm. My crystal also suggests we can expect a tiny bit of fluctuation one way or the other for every economic news item published.

 

Overall there is no real economic change on the horizon. Trump will try hard, but I don’t see him being able to get any of his proposed economic changes through Congress. More Importantly, the debt ceiling suspension expires in March. Although my crystal ball suggests, they will borrow "extra" before the expiration. And in April, income tax money comes in, and “that” should carry the Federal Government through for several more months. With that said, eventually Congress will have to have that debt ceiling discussion again, and the already approved spending budget and tax revenue don't wash, so the congressional "discussion" should point to lower interest rates until Congress can decide what to do with the debt ceiling. 

 

As always, looking into my crystal isn’t foolproof. So breaking out the crystal ball for interest rates under Trump’s watch isn’t foolproof. But if I was betting what the next several months look like, I think we can expect to see much of the same for right now. Rates should hover around 4 to 4.5% for the next several months.

 

If “for some reason” your crystal ball is saying something different, please feel free to add to this post. I am sure hearing different crystal ball readings should be helpful. It is always fun hearing about all the different crystal ball readings.

 

 

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Rainmaker
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Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Your thoughts on interest rates mirror my own, Jon!  I've been trying to determine what may happen in that regard.  I thought before the election they would likely go up right after voting was complete.  But, the unexpected Trump win changes things a bit.  I thought this article about Trump, Janet Yellen and interest rates was interesting: http://www.cnbc.com/2016/11/09/trump-win-casts-doubt-on-feds-plans-to-hike-interest-rates.html

Nov 15, 2016 04:53 AM #1
Rainmaker
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Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

CONGRATULATIONS Jon on having this blog FEATURED in the Old Farts Club group!    

Nov 15, 2016 04:54 AM #2
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John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Jon, I don't think your Crystal Ball is too far off from mine.  

The Trump win and his proposed plans signal that we could see an increase in inflation, which ALWAYS causes mortgage rates to go up ----- inflation is something that the Fed has been trying to trigger for a while, and it looks like the Trump win got us there.

 

While I LOVE low interest rates, it's important to remember the rates are only so low because of how dismal our economy has been --- I don't put problems on the shoulders of any individual POTUS, but the past 8 years has been the only 8 year stretch without a single year of 3%+ GDP growth, and this has kept mortgage rates so incredibly low, along with bond yields.

 

If the markets see a sign that the economy is going to pick up (and costly infrastructure deals could certainly support that theory), inflation is also sure to pick up, and rates are sure to go up.

 

Short term, things are still fragile and low 4's should stay put (or move slightly lower as the market digests the recent craziness), but long term, we may see a return to "normalcy" for interest rates, meaning buyers & those considering a refinance need to act sooner than later.

 

.....just another crystal ball to add to the mix : )

Nov 15, 2016 06:24 AM #3
Rainmaker
1,228,366
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Myrl Jeffcoat ~ I really liked the article you linked, thank you! The Trump card put a wrinkle (and or) hazed the crystal ball. But the next several months shouldn't bring too much change. The long run might be a different story. For those that like to gamble "maybe" they want to ride the wave and hold out, for those that like to play it safe, refinancing and getting a 30 year fixed is the safe move.  

And thanks for the feature in OFC. I always love being featured in one of the greatest groups going in the Rain

 

Nov 16, 2016 01:22 AM #4
Rainmaker
1,228,366
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

John Meussner ~ I love it "you got your crystal ball fired up. It isn't easy reading the infamous crystal ball, especially when a slight change in the wind can change things "big-time." It looks like a lot of crystal balls have a good read on short-term probability. It's the long term probability that gets dicey

Nov 16, 2016 01:28 AM #5
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Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Mine says that now there is a Republican President the house will expand infrastructure spending and reduce taxes. This is a sure fire way to enable inflation and raise rates.

Nov 17, 2016 07:56 AM #6
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Jon Kolsky

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