Will rates go higher under Biden?

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Don’t expect rates to budge the moment he takes the oath of office, but a Biden administration could eventually impact the direction of mortgage rates.

“Expect tax rates to rise, the Fed to offset increasing inflation with higher rates, and the economy to slow,” Guy Baker, founder of Wealth Teams Alliance, tells The Mortgage Reports.

And there's this, from Rick Sharga, executive vice president at RealtyTrac: "Biden has called for more government investment in affordable housing, which could be funded in part by proceeds from fees attached to home sales backed by government agencies like Fannie Mae, Freddie Mac, and the FHA."

Baker, Sharga and other experts polled by The Mortgage Reports in October predicted 30-year rates would rise to an average 3.51% in 2021 under a Biden administration.

But presidents only have so much influence over mortgage rates — the coronavirus pandemic was the main driver of sinking rates in 2020. Just how well the country can contain the out-of-control virus before securing enough vaccine will dictate rates after Biden takes office.

If the COVID crisis takes another bad turn, investors could pull money out of stocks and pour it into Treasury bonds as a safe haven. That would cause the yields (interest) on Treasuries to sink, and mortgage rates usually following the same path.

How to land low rates in 2021

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If rates do rise under the new president, borrowers will need to use a few not-so-secret methods to sniff out the lowest mortgage rates possible.

First, your credit score will have to be in tip-top shape, or you’ll never get offered a super-low rate.

The best way to find the best rates is by shopping around, because rates can vary from one lender to the next. Research from Freddie Mac shows borrowers can save thousands of dollars by comparing at least five rate quotes, instead saying yes to the very first offer.

If rates start to take off, a homebuyer or refinancer might offset higher borrowing costs by saving money on homeowners insurance. With a little comparison shopping, you could potentially cut the annual price of your coverage by hundreds of dollars.

About the Author

Ethan Rotberg

Ethan Rotberg


Ethan Rotberg is a staff reporter at MoneyWise. His background includes nearly 15 years as a writer, editor, designer and communications professional. He loves storytelling, from feature writing to narrative podcasts. His work has appeared in the Toronto Star, CPA Canada and Metro, among others.

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