A great question lately is this: Will mortgage rates change because of the impeachment of President Trump? This quick answer is probably not but the final say on that is still pending. As many of you know; mortgage rates can fluctuate based on economic reports, national or international events or political news that may have an impact on the economy.
When it comes to mortgage rates it's imoportant to remember that mortgage rates originate in the Mortgage Backed Securities market (MBS). And to be clear; the Fed does not set mortgage rates. They have an influence over the bond markets but no direct connection to consumer mortgage rates.
Once you have a clear understanding of where consumer mortgage rates originate you then should look at the number thing that makes the biggest impact. And that is the economy.
An Improving Economy Is Bad For Mortgage Rates:
It's 100% true. Strong inflation, wages and overall growth pulls investors from the bond market thus causing bonds to sell off. When bonds sell; mortgage rates move higher. However the opposite is true when the economy is seen as weakening; mortgage rates move lower in an economy that is struggling.
Why bring this up?
One simple reason; if the impeachment process starts to impact the economy (or investors believe it will) then bonds will improve and so will mortgage rates. Without that there will probably be no to a limited impact impeachment has on consumer mortgage rates as we move into 2020.
Important events and reports to keep an eye as we move into January 2020:
- Economic reports such as ISM, CPI and Employment
- Updates to the trade war with China
- Brexit news and how that might impact world trade
It's impossible to predict the direct of mortgage rates but knowing to what to look for and planing for various outcomes will enable homeowners and homebuyers to lock in a low rate at great terms.
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