How Could the Presidential Election Impact the Mortgage Market

March 29, 2016

We all know that it’s impossible to predict what will happen in the financial markets, whether mortgage rates will rise or fall and how real estate prices will change over a given period of time. Still, when we’re in the midst of something as significant as a presidential election it’s interesting to consider what the impact might be should voters cast their ballots in one direction or another.

Do the Markets Prefer One Candidate?
According to David Kelly, Chief Global Strategist at JPMorgan Funds, as quoted in a recent news story from CNBC, “Markets don’t like uncertainty, and the more extreme the candidates that get nominated the greater the uncertainty.” Bernie Sanders and Donald Trump are seen as less predictable than some of their opponents.

The Mortgage Tax Deduction
As each candidate proposes their solution for strengthening our economy many in the real estate and mortgage industries will keep a keen eye out for any mention that the mortgage tax deduction could be in jeopardy.

Several candidates recommend capping the deduction at a certain amount. For example, Sen. Marco Rubio and Bernie Sanders both advocate a cap after $300,000 in payments. Of course, whoever the new president is he or she will not write the tax code and will need to work with congress to enact any suggested changes.

Will Buyers Hold Back?
Economic uncertainty generally has a negative impact on home sales, leading potential buyers to sit tight and hold off on buying a new home. It’s too soon to say whether sales will slow as the election approaches or if low interest rates and rising real estate prices will motivate buyers to keep sales strong through the summer buying season.

Photography by [rangizzz] ©

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