With Election Day upon us, which candidate is most likely to bring lower mortgage rates to American home buyers?
Economists who spoke with MarketWatch agreed that a win by Republican presidential nominee Donald Trump would usher in higher mortgage rates, as he is expected to impose tariffs on imported products, among other policies, which could drive up the cost of goods and contribute to inflation.
Policies proposed by Vice President Kamala Harris, the Democratic nominee, could result in more housing supply, the experts said.
Thus far, jittery markets have kept mortgage rates firmly over 7% for much of last week and this week. The 30-year mortgage rate averaged 7.05% as of Tuesday, according to Mortgage News Daily.
See also: 7% mortgage rates are a warning about who will win the election, economist says
The median sale price of a home has remained high, rising nearly 4% year over year in September to $428,000, according to data from the real-estate brokerage Redfin RDFN.
Here’s what the economists are saying.
The three economists MarketWatch spoke to stressed that the Federal Reserve, not the U.S. president, has the greatest control over the direction of mortgage rates, and that the Fed operates independently of political pressures.
The Fed is expected to reduce its benchmark interest rate by 25 basis points this week. Recent government data showed the yearly rate of inflation slowing to 2.1% in September, close to the central bank’s 2% target.
Hence, “mortgage rates will likely be lower next year — not because of the president, but because inflation is pretty much under control now,” Daryl Fairweather, the chief economist at Redfin, told MarketWatch.
Trump has repeatedly promised voters on the campaign trail that he will bring down mortgage rates. At one recent rally in Arizona, he inaccurately claimed that “today the mortgage rates are 10%, 11%, 12%” and that “we will drive down the rate so you will be able to pay 2% again.”
The president does not control interest rates, although Trump has suggested that presidents should have more sway over the Fed, which sets monetary policy.
The candidates have proposed different policies, including Harris’s plan to add more housing units and Trump’s plan to roll back government regulations that can make it harder to build. But neither candidate would be able to enact such policies on their own, as they would likely require congressional approval. Still, one candidate’s policies look to be more useful for homeowners and home buyers, Fairweather added.
“Harris’s proposed policies would boost both supply and demand of housing, supporting more sales and higher home values,” she said.
“Trump’s plans to tax imports would likely increase consumer prices, which could mean higher rates,” Fairweather said, “but it might also hurt economic growth, leading to lower rates.”
From the archives (September 2024): What Trump and Harris say they’ll do to fix the high cost of housing — and what’s worked in the past
A Trump presidency could result in higher mortgage rates compared with a Harris presidency, said Lisa Sturtevant, the chief economist at Bright MLS.
“If Trump wins, expectations about the adoption of policies that will push inflation up,” such as curbing immigration and imposing tariffs, “will likely send mortgage rates higher,” she said. Hence, “home prices could soften as higher rates cause more prospective home buyers to hit an affordability ceiling.”
If Harris wins, rates will first likely “bump around” but would then “continue to head lower,” Sturtevant said. And eventually, “mortgage rates should end the year and head into next year probably in the low 6s,” she added, with home prices also poised to rise in most local markets.
Fannie Mae FNMA, a government-sponsored enterprise that backs one in four residential mortgages in the U.S., expects the 30-year mortgage rate to fall to 5.9% in the first quarter of 2025 and to finish the year at 5.6%.
A Harris presidency would bring a clearer long-term road map, as she has proposed creating 3 million new housing units, among other goals, to meet demand, Realtor.com economists wrote in a report on Monday.
“Any new supply helps bridge that gap and would be a boon for the housing market,” they said, and Harris’s efforts focused on affordable housing will “help households who are most affected by rising prices and rents.”
Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.
Not all the economists shared such a clear view of the future.
Regardless of who wins the election, the Fed is still the bigger driver of mortgage rates, said Selma Hepp, the chief economist at CoreLogic. She also stressed that it could take time before mortgage rates fall further.
“It may take a few months for the ripple effect of lower Fed rates to be felt by potential home buyers and refinancers,” Hepp said.
Many Americans have their own thoughts about which candidate would be better for the housing market.
About a third of Americans who had already voted as of Nov. 1 said that mortgage rates will fall if Trump is elected, according to a recent survey commissioned by Redfin. In contrast, 23% said they expect mortgage rates to fall if Harris wins.
But those consumers might be misunderstanding how mortgage rates move. Mortgage rates in fact closely track the 10-year Treasury yield, which often moves in advance of the Federal Reserve’s decisions on interest-rate policy.