Despite Fed rate cuts, mortgage rates may remain elevated following Trump's election victory.

Mortgage rates are increasing, while credit card, personal loan, and auto borrowers are benefiting from recent interest rate cuts.

After Donald Trump's election victory, 30-year fixed mortgage rates temporarily increased, reaching 6.98% on Thursday, according to Mortgage News Daily.

Since September, the rate has increased by almost 1% despite two Federal Reserve cuts to its benchmark interest rate, totaling 0.75%, including a 25 basis point reduction announced on Thursday.

Why mortgage rates have kept rising

Mortgage rates are closely linked to 10-year Treasury bond yields, which tend to increase when investors anticipate stronger economic growth and higher inflation, even when the Federal Reserve reduces the federal funds rate.

"According to Melissa Cohn, regional vice president of William Raveis Mortgage in New York, economic data reports from the middle of September indicate that the economy is performing better than anticipated. As people secure jobs and earn money, they tend to spend it, which leads to inflation."

The increase in mortgage rates is a reflection of market anticipation that President-elect Trump will accelerate the expansion of the budget deficit at a faster rate than Vice President Harris would, according to Michael Nourmand, president of Nourmand & Associates in Los Angeles. Additionally, Trump's proposed tariffs on imported goods could lead to inflation by increasing prices, Nourmand says.

According to forecasts by major mortgage lenders and industry associations, mortgage rates are predicted to decrease slightly in the upcoming months, but are expected to remain approximately 6% throughout 2025, which is nearly double the rates from three years ago.

If Republicans gain control of the presidency and both chambers of Congress, fewer obstacles to new spending could lead to higher bond yields, as investors anticipate more borrowing and inflation risks, according to Mortgage News Daily.

Nourmand predicts that the continued deficit spending and discussions of additional tariffs on imports will keep mortgage rates high until the end of 2024.

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