Mortgage Rates Set To Rise as Donald Trump Clinches Election Win

Donald Trump has defeated Kamala Harris in several key swing states to become America’s 47th president, and the financial markets that determine mortgage rates are already reacting.

The Associated Press projected Trump’s victory in Wisconsin at 5:43 a.m. ET on Wednesday, putting the Republican former president over the threshold needed to become just the second candidate in U.S. history to win two nonconsecutive White House terms.

Bond markets responded quickly, with the yield on the 10-year Treasury rising to 4.47% Wednesday morning, up from 4.3% before the first election polls closed on Tuesday. Mortgage rates generally move in tandem with the 10-year yield, with lenders setting their daily rates based on the underlying bond markets.

It means that daily mortgage rates are set to rise at the start of business on Wednesday, a move that will be unwelcome to prospective homebuyers who have been waiting for rate relief.

Although Trump has vowed to somehow lower mortgage rates if elected, the prospect of his election victory had been driving mortgage rates higher in recent weeks. After touching a two-year low in mid-September, mortgage rates have risen for five consecutive weeks, hitting 6.72% last week, according to Freddie Mac.

Comments from high-profile bond investors indicate they are fearful that a red sweep of the White House and Congress will result in higher government deficits, according to Mortgage News Daily. Trump is also viewed as good for the stock market, with the main indexes jumping higher at the opening bell on Wednesday, making bonds relatively less attractive to investors.

In the early hours of Wednesday morning, Trump—flanked by his family—declared to supporters in West Palm Beach, FL that it was “a political victory that our country has never seen before” and vowed to “fight for you and your future”.

“We’re going to make you very happy, we’re going to make you very proud of your vote. America has given us an unprecedented and powerful mandate,” he said.

Trump added that he will “not rest until we have delivered a strong safe and prosperous America that you deserve and that your children deserve.”

If Republicans deliver on Trump’s vows to impose blanket tariffs and conduct a massive migrant deportation operation, while extending tax cuts, the government’s deficit could balloon.

Bigger deficits would mean more bonds on the market, and investors have responded by bidding long-term bond prices down, driving yields up. Higher 10-year yields mean higher mortgage rates.

“Investors are taking Trump at his word and believe if he wins, it will lead to higher tariffs, immigrant deportations, and deficit-financed tax cuts in a full employment economy, all of which means higher inflation and more government borrowing,” Mark Zandi, chief economist of Moody’s Analytics, said on X last week.

“The recent surge in mortgage rates is a clear indication [of] what investors believe a Trump victory would mean for the economy and the nation’s fiscal outlook,” he added.

With Trump now headed for the White House, congressional control will be the next big question for mortgage rates. Republicans regained control of the Senate on Tuesday, but it could be days before control of the House becomes clear.

A Democratic majority in the House would likely be viewed by bond markets as a moderating force on Republican fiscal policy, requiring some level of compromise to pass spending packages. That could put a brake on mortgage rates and offer some relief.

If Republicans do hold on to their House majority, it could push rates even higher. On the other hand, a Republican House majority already seems extremely likely, as no part has ever lost control of one chamber of congress while forging a new majority in the other.

So a Republican sweep may be largely baked in to the bond market already. In that case, expect to see mortgage rates remain roughly flat from Wednesday’s level as the final House races get called.