Election Years & Interest Rates, Insights from Dave & Travis!
There is no doubt that the upcoming election has most people on edge to say the least? I heard that around 30% of qualified-ready home buyers are waiting till after the election to decide what to do. And we have home seller's doing the same thing. Historically, presidential elections have been known to influence mortgage interest rates and market activity. The uncertainty surrounding elections can lead to short-term volatility, but the long-term trends often tell a story of stability.
I want to share some insights into how mortgage interest rates have
historically been influenced by presidential elections. Here’s a bit of data from 1972 through 2020 to show you how political shifts can move the needle on interest rates, impacting both buyers and sellers. The last 4 years have been a very unique period in real estate sales and mortgage rates. We had those juicy under 3% rates in 2020-mid 2022 and record sales, record price increases and record low inventory. Then in 2022-2023 we saw the fastest increase in mortgage rates ever, peaking in the 7-8% range! 3rd quarter of 2024 saw a reduction to the 5-6% range. Then the Fed finally lowered the prime rate and what happened? Mortgage rates went up! Below is some historical Data.
The chart I’ve included shows interest rate trends before, during, and after each presidential election. One thing is clear: election years can bring some changes to interest rates but often do not have much of an effect. Check out the rates around the 1980 election! For comparison November 2023 the 30 year conventional mortgage rate sat at about 7.37%. November 2024 sits at about 6.6%. My guess is the rates will be about 5.5% November 2025 but who the heck knows!
I’ve got another interesting chart for you—this one shows the average interest rates based on which political party is in office, comparing Democrats and Republicans.
As you can see, under Democratic leadership, interest rates tend to average slightly lower at 6.75% before the election and 7.39% during the election year, with a post-election bump to 7.58%. On the Republican side, rates are consistently a bit higher, hovering around 7.74% before the election, 7.88% during, and 7.66% after.
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