T
he short-term outlook for mortgage rates is uncertain, but a modest rate cut from the Fed this week is still expected. Economists predict that Donald Trump's fiscal policies will lead to rising and unpredictable mortgage rates through the end of 2025, driven by higher yields on 10-year Treasury bonds. This could make homeownership more challenging for first-time and moderate-income buyers as Trump's policies favor high-income individuals and existing homeowners.

    In the long term, however, economists expect mortgage rates to decline as inflation is brought under control. But for now, investors have reacted quickly to the election results, pushing up mortgage rates. The average 30-year fixed-rate mortgage has reached 7.13%, its highest level since July.

    Despite this, economists don't expect the election outcome to influence the Fed's decision on interest rates this week. A 25 basis-point cut is still anticipated, but markets are now showing a higher chance that the Fed will hold off on a December rate cut. Real estate stocks have also taken a hit, with many brokerages posting one-day losses, including Zillow and Compass which fell over 7%.