After the election, mortgage rates may stabilize and here's what to anticipate in early 2025.

• The average 30-year fixed-rate mortgage in the U.S. decreased slightly to 6.78% for the week ending Nov. 14, remaining almost the same as 6.79% a week earlier, according to Freddie Mac data from the Federal Reserve.
• That stabilization may be a good sign for the housing market.
• The market experiences a lot of uncertainty when rates are fluctuating rapidly, as stated by Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.

Experts believe that the stabilization of mortgage rates could indicate a positive outlook for the market.

The average 30-year fixed rate mortgage in the U.S. decreased slightly to 6.78% for the week ending Nov. 14, remaining almost the same as 6.79% a week earlier, according to Freddie Mac data from the Federal Reserve.

Despite its recent increase, which has been sustained for several weeks, the news is likely positive for homebuyers, according to Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.

Uncertainty increases in the market when rates fluctuate rapidly, as Lautz stated.

This fall, mortgage rates decreased in expectation of the first interest rate reduction since March 2020. However, borrowing costs increased this month due to the bond market's response to Donald Trump's election victory.

Experts say that while the president-elect has discussed reducing mortgage rates, presidents do not have control over the cost of borrowing for home loans.

Treasury yields have a significant impact on mortgage rates, which are also influenced by changes in the federal funds rate.

"James Tobin, president and CEO of the National Association of Home Builders, stated that they anticipate inflationary policies, such as tariffs or increased government spending, will increase the tax bill, and as a result, mortgage rates will also rise in response to the bond market's reaction."

The housing market could be affected by Trump's presidency. Credit card debt has reached a record $1.17 trillion. The inflation breakdown for October 2024 is not available.

Redfin's Chief Economist, Chen Zhao, stated that less volatility can be a positive sign.

""More stable mortgage rates provide homebuyers with greater certainty during their home search, allowing them to plan their budget accordingly," Zhao said."

Trump's team did not respond to a request for comment.

Don't expect 'huge swings' on mortgage rates

The uncertainty surrounding the election led to an increase in mortgage rates in October, and last week, rates rose even further as the stock market and yields responded to the election outcome.

On Nov. 6, the 10-year Treasury yield jumped 15 basis points, closing at 4.43%, its highest level since July, as investors predicted a Trump presidency would increase economic growth and fiscal spending. Meanwhile, the 2-year Treasury yield increased by 0.073 basis points to 4.276%, reaching its highest level since July 31.

Lautz stated that as we now have a president-elect, it is predicted that mortgage rates will gradually decrease in the future.

The possibility of future rate cuts remains uncertain from a monetary policy perspective, as Federal Reserve Chairman Jerome Powell stated on Thursday that the strong U.S. economy will allow policymakers to proceed cautiously in determining the extent and pace of interest rate reductions.

According to NAHB chief economist Robert Dietz, if the Fed continues to lower the federal funds rate, it could indirectly lead to lower mortgage rates.

As he stated, larger government deficits would result in higher growth rates, but only if expectations for improvement are met.

Experts predict that mortgage rates may become unpredictable and fluctuate in the upcoming year.

Lautz stated that she does not anticipate significant drops into the 5% range, and her expectation is that rates will remain in the 6% range as we approach 2025.

How buyers, sellers and homeowners can benefit

As the winter season approaches, lowering rates can provide an opportunity for buyers who have been searching for homes for a while. Competition decreases during the winter months due to school-related reasons, as homebuyers with children are hesitant to move during the school year, according to Lautz.

Current homeowners can also make the most of lower rates.

If you bought your home around this time last year, when mortgage rates were at their peak of around 8%, you may benefit from a mortgage refinance, according to Lautz.

If rates have decreased by one to two points since obtaining the loan, it may be "sensible" to refinance, according to Jeff Ostrowski, a housing expert at Bankrate.com, following the Fed's first rate cut this fall.

A loan refinance is not free, and you may incur associated costs such as closing costs, an appraisal, and title insurance. The total cost of a refi can range from 2% to 6% of the loan amount, according to Jacob Channel, an economist at LendingTree.

Experts advise considering refinancing if you're unsure, by examining current rates and contacting lenders for guidance.

In the second quarter of 2024, U.S. homeowners with mortgages had a net homeowner equity of over $17.6 trillion, according to CoreLogic. This represents an 8.0% growth from the previous year, with home equity increasing by $1.3 trillion in the second quarter of 2024.

To offset the slightly high borrowing costs on your next property, you may consider making a larger down payment, according to Lautz.