By AnnaMaria Andriotis
Mortgage rates have spiked in the wake of Donald Trump's election victory.
Average rates on 30-year fixed conforming mortgages hit 3.87% on Thursday, climbing a quarter of a percentage point since Tuesday's market close, according to MortgageNewsDaily.com, which tracks mortgage rates. That is the biggest increase in a two-day period since June 2013 when the Federal Reserve announced its plan to start easing its stimulus program, according to the site.
The upward move came as the yield on the 10-year U.S. Treasury jumped in the wake of the election. The yield was around 2.1% Thursday, the highest since January, versus 1.85% on Tuesday. (U.S. bond markets were closed for the Veterans Day holiday Friday.)
The bond move reflects investor views that Mr. Trump will embrace fiscal stimulus, such as infrastructure spending, to boost growth, potentially spurring inflation. Mortgage rates tend to move in relation to the yield on the 10-year note.
Over the long run, rising mortgage rates can be bad for housing, making homes less affordable and cutting into sales volume. In the short term, though, they can have the opposite effect.
That is because the prospect of higher rates can push some home buyers who have been on the sidelines to pull the trigger. The same is true for borrowers who have been considering refinancing. The thinking is the same for both: Act now before rates head even higher.
U.S. refinancing spiked in the wake of the U.K. Brexit decision earlier this year as mortgage rates plummeted and borrowers found a new opportun-ity to save on their mortgage. Of course, rates have jumped plenty of times since the recession, only to reverse course thanks to subpareconomic growth.
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(END) Dow Jones Newswires
November 13, 2016 23:45 ET (04:45 GMT)
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