Well, President Donald Trump is officially back in office after his much-anticipated inauguration today in Washington DC
He was sworn in as the 47th president of the United States to coincide with his 45th.
After what felt like a long waiting game between early November and today, we will finally find out what action he will take.
Like most politicians, there is always a lot of talking, but it doesn’t always work.
For the purpose of this website (and this article), my focus is on the direction of mortgage rates, which will be guided by both policy and economic conditions.
Mortgage Rates Up 7% to Start Trump’s Second Term
| 30 Year Fixed Rate | First term | Second Term |
| Start | 4.25% | 7.08% |
| Finish it | 2.85% | ????? |
| At the top | 5.05% | ????? |
| Down | 2.76% | ????? |
When it comes to mortgage rates, to say that things are different this time would be a huge understatement.
Of course, Trump is talking about many of the same things eight years later, namely China.
But for reference, the 30-year fixed rate stood at 4.25% when Trump took office as the 45th president back on January 20, 2017.
And he was within 3% when he unexpectedly won the presidential election in November 2016.
Given that the rate is closer to 7.125% today (I use one-eighth like mortgage lenders do), it’s a whole different ballgame.
The rates are nearly double what they were then, and more than double the decline seen during this first Oval Office period.
Real Estate Rates Hit Record Low During Trump’s First Term
To put it bluntly, mortgage rates fell to 2.65% in January 2021 just before Trump left office, according to Freddie Mac’s weekly data.
Apparently that was their lowest point during his first four years in the White House.
The reason prices have fallen so much is because of the pandemic, which has led to another round of Quantitative Easing (QE).
QE is a program in which the Fed bought billions worth of mortgage-backed securities (MBS), thus lowering the rate of loans.
This led to record low mortgage rates, which officially reached their lowest point in history during the week ending January 7, 2021.
The chances of another round of QE seem very dim at this point, although I suppose anything is possible…
But Rates Raised to 5.05% Midway Through Late 2018.
Things haven’t always been good for mortgage rates under Trump.
I looked at the daily mortgage rate data from Mortgage News Daily and found that mortgage rates peaked at 5.05% during Trump’s inauguration.
And you have to remember that a 5% rate back then sounded like the end of the world. Today, it can be a blessing. Funny how that works.
However, this happened in November 2018 after bond yields started to rise as government spending increased and the economy looked overheated.
That government spending combined with tax cuts led to an increase in treasury bond issuance and was accompanied by several Fed rate hikes (tightening policy).
The Fed justified its hike based on very low unemployment and rising wages, the first sign that inflation may be rearing its ugly head.
At that time, we did not know how bad the inflation would be. We also had no idea that a global pandemic would emerge, leading to massive stimulus and government spending.
However, that rate hike proved short-lived after the Fed began cutting rates in 2019, the first time it has done so since 2008 (the housing crisis).
That was led by uncertainty about the direction and strength of the economy and trade tensions with China (sound familiar?).
What Should We Expect This Time?
Well, I’ve written a whole post about mortgage rates in Trump’s second term and the long and short of it comes down to what he does versus what he says.
And what the economy does over the next four years, which he may have control over.
Another piece is that just like his first election victory, prices are rising in anticipation of what he can do.
But this time they are up about 1% since mid-September, despite being the frontrunner and expected to win.
In 2016 they again jumped almost 75 points (0.75%), but because it was not the expected winner.
So there is an argument that all possible fears under Trump are completely baked at this point.
Which means it can slow down, like it did in 2017. But we also have wild cards to consider, such as an epidemic, which may push back the inevitable. Ironically, until Trump’s second term.
I wouldn’t be surprised if rates breathe a sign of relief now that he is finally in office. But I also expect more changes as he starts doing instead of just talking.
There are similarities, such as trade wars and fears of government spending. But we also start from a very different place. Mortgage rates are the highest in 25 years compared to rock-bottom when he won in 2016.
As always, be prepared for opportunities as in any year and be aware of times when the average trend is not your friend.
Read on: Mortgage rate predictions 2025
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