Since the election of Donald Trump as the 45th president of the United States against popular expectations, a general air of uncertainty has hung in the air- not the least the housing market.
Critiques have labeled Mr. Trump the “inflation president,” as many of them fear that his extremist and protectionist policies will potentially provoke a global trade war and spike interest rates, among other forecasted unpalatable outcomes in the long term.
Mr. Trump himself has said little about his plans for property market, but mortgage rates appear to set for the moon since he emerged the US president-elect in November, jumping to 3.88% from 3.63% in just a few days.
The price hike is fuelled by speculations that Trump’s proposed economic plans, such as massively pumping up spending on infrastructure and drastically cutting down corporate and personal income taxes, will trigger prices and inflation upwards. That line of thinking has declined demand for bonds and rocketed yields on 10-year treasury to their highest levels in a year.
With the misty cloud of economic doubts and mortgage rates on the rise, home buyers are mulling refinancing or taking up loans before rates surge even higher.
But property experts say consumers don’t have to panic as situations will eventually stabilize after the post-election wave.
The experts generally agree that the right reaction would be to ignore the noise and avoid any rash decisions on refinancing. They advise that the first thing to consider when mulling a refinance will be to review your financial situation and how long you are hoping to stay in the home, as well as the length of time it will take for your savings to justify the cost of a refinance. Using an online mortgage calculator can help you with this.
“The sudden increase in rates is not likely to sustain”, said Greg McBride, the chief financial analyst at Bankrate. He explains that typical changes in rates are very quick in shorter time periods and very slow for prolonged periods of time.
Erin Lantz, who is the vice president of mortgages at Zillow, advised that consumers presently thinking about buying or refinancing, as panic reaction, should stay patient. The rates will likely normalize once the markets find a new equilibrium, he added.
Ralph McLaughlin, the chief economist at Trulia, an online home property website, also recommend that consumers don’t make any rash decisions about refinancing and should sit and wait for now.