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conomists are revising their forecasts for mortgage rates in light of Donald Trump's election and policy proposals. According to Bloomberg, experts expect higher rates due to potential economic impacts from significant tariff and tax cuts. Redfin has already adjusted its projected average mortgage rate for 2025 from 6.1 percent to 6.8 percent, citing uncertainty over the president-elect's actual policies.

    Capital Economics also anticipates higher mortgage rates and a weaker recovery in home sales. Economist Thomas Ryan predicts that mortgage rates around 7 percent will persist through the year and may only drop by a quarter of a point by the end of next year. Trump's proposals include tariffs on imports, which could lead to increased inflation and be passed on to consumers.

    Tax cuts could also lower fiscal revenue and raise the national debt, resulting in higher long-term interest rates. The bond market has been more subdued about the potential for elevated inflation due to tariffs, with Barclays economists increasing their inflation projections for the next two years after the election. Additionally, Trump's proposals may lead to a reduction in the construction workforce, further straining inventory and driving up home prices.