Jeanna Smialek:
Yes, so there are a couple of things happening here. One of them is that mortgage rates really turn on what the Fed is expected to do, so not so much what it is doing, but what it what it is expected to do next.
And what we have seen in recent weeks and months is that investors first really thought the Fed was going to cut rates a lot. So you did see mortgage rates come down a little bit earlier this year. But then recently they have kind of pulled that back a little bit. They’re not expecting the Fed to cut rates as much.
And that’s for a couple of reasons. One is that the economy has been stronger than we had expected. We have seen some signs of real resilience, especially on the part of the U.S. consumer. And then the second thing is Donald Trump’s election.
As it became clear that Mr. Trump might win election and with his win this week, there’s been this expectation that we might see policies that could stoke a little bit of growth, but which could also stoke some inflation. Think tariffs, think tax cuts, and those things could keep the Fed from cutting interest rates and could also just make the nation’s debt pile grow.
And those two factors both push up bond yields and markets and those translate into higher mortgage costs, so sort of those two big factors feeding into mortgage rates at the moment.
