If you were thinking about refinancing your mortgage, put it on hold for a few days.
Financial markets will need time to digest the election of Donald Trump.
And if you thought you missed your chance to refinance, you should keep an eye on mortgage rates in coming weeks and months. There’s a chance that they could fall, even as the Federal Reserve is expected to raise short-term interest rates as early as mid-December.
RATE SEARCH: Shop today for a mortgage refinance.
Refinancing is about rates
Mortgage rates have been in prime refinancing territory all year.
They won’t stay low forever, but Trump’s victory might delay the timing of mortgage rates’ increase. Tuesday night’s Treasury futures indicated a drop of about a tenth of a percentage point Wednesday morning for the 10-year Treasury.
That could translate into a drop of about an eighth of a percentage point for the 30-year, fixed-rate mortgage.
“You’ll probably, more than likely, see some knee-jerk reaction based on the winner,” says Brett Sinnott, vice president of capital markets for CMG Financial, a mortgage company in San Ramon, California.
Sinnott spoke when Hillary Clinton was favored to win the election, and he expected mortgage rates to rise for a day or two before settling back.
But now it looks like mortgage rates will drop for at least a few days.
RATE SEARCH: Refinance soon, before mortgage rates rise.
Refinancing window’s still open
Almost 13 million homeowners could cut their house payments by refinancing, but haven’t done so, according to the Urban Institute. You could be one of them. (That 13 million figure excludes people who have a recent history of multiple delinquent payments, because they would have trouble qualifying for a new loan.)
Sean Becketti, chief economist for mortgage giant Freddie Mac, observed in mid-October that Treasury yields had been moving upward “as an increasing number of financial market participants foresee a December rate hike after a series of positive economic data releases.”
He acknowledges one big reason that the Fed might not raise short-term interest rates: The inflation rate remains below the Fed’s target.
Why refinance now
“It’s not a bad thing to lock and just get it done with,” Sinnott says. “Doing it right now, all you’re doing is relieving some anxiety.”
On the other hand, you could benefit by waiting if mortgage rates do fall.
Fantastic mortgage rates
Kevin Parker, a mortgage executive for Navy Federal Credit Union, says you shouldn’t wait too long.
“Mortgage rates are at fantastic levels,” he says. He expects rates to “creep up,” but it’s anyone’s guess when they do.