For most of the pandemic, people have enjoyed record low interest rates, making way for a boom in mortgage refinancing. But experts say the upcoming election could have a major impact on whether those rates stay low.
"I think for a lot of reasons there will be even more volatility. You have the backdrop of the pandemic, you have quite a rivalry," said Josh Stech, Co-founder and CEO of Sundae, a company that helps people with homes in bad condition get their properties sold.
Stech says the pandemic has created even more of a wedge between the two parties and interest rates will be impacted.
"I would say that we’re cautiously optimistic that we’ll see a strong 2021 regardless of who wins but there’s always that looming uncertainty of who wins and also what policies that follow that, that could impact unemployment, that could impact tax rates, that could just change consumer behavior again," said Stech.
Matthew Garcia, a Senior Loan Officer with Supreme Lending, says historically, interest rates waver before an upcoming presidential election.
"Last election in 2016, rates were in the lower threes. Literally, two to three days later rates went into the fours. That’s how violent and how rapid interest rates can move. A lot of folks', mistakes people make is they think the government makes interest rates. They don't. Interest rates for mortgages are controlled by bond market activity," said Garcia.
Specifically, Garcia says, treasury bonds and mortgage-backed securities.
"Now, at some point, depending on what the next president decides to do, if that affects monetary policy by the Fed(eral Reserve) and the Fed has already come out and said we don't plan on changing anything but the president has the ability to influence that. If they make a decision that could ultimately affect what the Fed’s decision on monetary policy is, we would see a rapid increase in interest rates according with that," said Garcia.
Another potential big influence on interest rates?
"If COVID-19 is cured, you’re going to see rates spike overnight. Or any kind of change in economic policy or even, too, the economy itself being affected by COVID has the potential to drive interest rates a lot higher. So, there’s definitely on the horizon two major components, the election and COVID cure that are going to affect interest rates going forward," said Garcia.
Garcia says it's best to take advantage of interest rates while they're low. Experts recommend speaking to a loan officer or financial advisor before taking out a loan.