U.S. mortgage rates have surged to their highest point in four months this week, and there’s potential for further increases due to concerns that President-elect Donald Trump’s economic policies could fuel inflationary pressures.

The average interest rate on the widely-used 30-year fixed mortgage rose to 6.79% from last week’s 6.72%, marking the highest rate since July, as reported by mortgage finance firm Freddie Mac on Thursday.

This recent increase marks the sixth consecutive weekly rise, adding up to a 71-basis-point increase since the end of September.

With housing supply still below pre-pandemic levels, these elevated mortgage rates, coupled with high home prices, have stifled sales of existing homes, which reached a 14-year low in September.

“Buyers who were waiting until after the election to get into the market may not see rates as low as they had hoped,” stated Lisa Sturtevant, chief economist at Bright MLS.

The rate on the 30-year mortgage is influenced by the yield on the 10-year Treasury note, which spiked to a four-month high following Trump’s victory in the presidential election. Trump’s platform includes proposed tax cuts, which, according to economists, would likely stimulate the economy, increase the federal budget deficit, and drive up government borrowing.

Additionally, Trump pledged to introduce a 60% tariff on Chinese goods and at least a 10% tax on all other imports, which analysts believe could spark inflation and limit the Federal Reserve’s options to lower interest rates.

A significant portion of current homeowners have mortgage rates below 4%, creating a “rate lock” effect that has restricted the supply of previously owned homes in the market. Bright MLS estimates that the typical monthly mortgage payment for a $400,000 home has surged by nearly $200 over the past six weeks.

{Matzav.com}