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Are Mortgage Rates Affected by Presidential Elections?

By Amanda Curry · Jul 20, 2016 · Mortgage Rates

Are Mortgage Rates Affected by Presidential Elections?

Image courtesy of Flickr, Gage Skidmore

One way to determine if mortgage rates are affected by the Presidential election is see to if there is any correlation between their direction and elections.

With the upcoming election on the horizon, it's only natural to wonder how it will effect ourselves personally. What will it mean for our taxes? How will it affect my healthcare? What will the election do to interest rates?

We always hear talk about how mortgage rates drop after an election. One way to determine if mortgage rates are affected by the Presidential election is to see if there is any correlation between their direction and elections.

For our analysis, we relied upon Freddie Mac's archives, which shows the 30-year fixed rate mortgages since 1971. This has allowed us to analyze mortgage rates across 12 election years in order to draw conclusions. Specifically, we were looking to see if mortgage rates swung drastically from prior years and to analyze the rates to determine how they reacted immediately after an election. Let's take a look:

Do Presidential Elections Affect Mortgage Rates?

1972-Richard Nixon vs. George McGovern

During the 1972 election, Richard Nixon pummeled George McGovern in a landslide victory. Throughout 1972, mortgage rates hovered around 7.30. This was a bit of change where averages in 1971 tended to hover a bit higher, at 7.60. Interestingly, in November of 1972, mortgage rates were at 7.43 and only increased to 7.44 the following month. Through March of 1973, the 30 year fixed mortgage rate stayed steady until it started to increase quite rapidly.

Takeaway : Mortgage rates remained steady throughout the 1972 election year.

1976-Jimmy Cater vs. Gerald Ford

In 1976, Carter defeated Ford, and the 30 year fixed mortgage rate stood at 8.81%. It dropped to 8.79% a month later and stayed pretty much unchanged for an entire year afterwards.

Takeaway : The election did not result in a significant change in the 1976 election year. There is no steady trend in either rising or falling interest rates for this election.

1980-Jimmy Carter vs. Ronald Reagan

In 1980, Reagan took office after winning in a landslide victory to Carter. At this point in time, the 30-year fixed averaged 14.21. A month later, it increased to 14.79 and a year later the rates were at 18.45%. Economists note that this was mainly due to inflation.

Takeaway : Although there was a major spike in the 30 year fixed mortgage rate following the 1980 election, economists chalk it up as a result of staggering inflation.

1984-Ronald Reagan vs Walter Mondale

Four years later, in 1984, Reagan won again and the 30-year fixed was slightly improved at 13.64. As America struggled to get back on track, mortgage rates dipped to 13.18 in December and progressed dramatically over the next year. By the end of 1985, mortgage interest rates were down to 11.26. By the end of 1986, just two years later, the economy had regained strength and mortgage rates had dipped to 9.32.

Takeaway : 1984's election resulted in a steady drop in interest rates, with rates continuing to drop over the next two years.

1988-George HW Bush vs. Michael Dukakis

Leading up to the election in 1988, rates slowly decline. In 1988, George HW Bush was elected to office and the 30 year fixed rate was much more reasonable at 10.27. Immediately after the election, the rate rose to 10.61, however, rates did not seem to fluctuate much thereafter, vacillating after November.

Takeaway : The 1988 election marking the end of Reagan's team and the beginning of Bush's shows us no steady trend in either rising or falling interest rates.

1992-George HW Bush vs. Bill Clinton

In 1992, Bush lost to Clinton, and mortgage rates steady dropped following. The most significant drop took place after inauguration, as rates dropped from 8.31 to 8.21 in December.

Takeaway : Rates steadily fell after the 1992 election, with the most dramatic change occurring after inauguration.

1994-Midterm Election: Bill Clinton's Term

The midterm election of 1994, held in the middle of Bill Clinton's first term, saw stunning gains for the Republican Party, which took control of both houses for the first time since 1954. As Republicans took over both houses we saw the biggest shift in mortgage rates. In weeks prior to the election, rates were at 8.8, while the average for the weeks following the election were nearly half a point higher at 9.20.

Takeaway: Republicans taking over both houses showed to definitely play a part in rising mortgage rates, since the jump from November to December of 1994 was significant.

1996-Bill Clinton vs. Bob Dole

For the election of 1996, Clinton was reelected into office. At this point in time, we see a variation in rates. Rates steadily decreased through the election, and with the exception of a small jump in January (7.60 to 7.82), rates continued to vacillate at 7.65 from February onward.

Takeaway: Rates stayed steady through the 1996 election.

2000-George W. Bush vs. Al Gore

George W. Bush won in 2000, and the 30-year fixed averaged 5.73. It inched up to 5.75 in December and a little more in the following year.

Takeaway : The 2000 Presidential election did not significantly change interest rates.

2004-George W. Bush vs. John Kerry

Bush won for the second time in 2004, when the 30 year fixed averaged 7.75. Immediately following the election, the rate fell to 7.38 in December.

Takeaway : Although the rates fell immediately following the election, the change from 7.75 to 7.38 is not significant or noteworthy.

2008-Barack Obama vs. John McCain

Barack Obama defeated McCain in 2008 and the 30 year fixed stood at 6.09. Rates tanked to 5.29 in December, however, economists note that the economy was in trouble, unemployment was surging and the Fed had announced a plan to buy mortgage backed securities.

Takeaways : Interest rates dropped following the 2008 election, however, it can be chalked up to economic factors.

2012-Barack Obama vs. Mitt Romney

As Barack Obama was elected for his second term in a row, interest rates reached historic lows at 3.35. Economic factors such as unemployment and low economic growth contributed to mortgage rates at lowest level in decades.

Takeaways : External economic factors played a part in low interest rates and were not directly correlated to the election.

11-Election Years and the Average Annual Rate Change

Year of Election

Annual Average Rate

Change Throughout Year


































Is there a Correlation with Mortgage Rates and Elections?

From our analysis, we have concluded that there is no evidence that supports mortgage rates consistently rising or falling in a presidential election year. Brad Yzerman, a loan office and creator of the site, confirms this, stating that ''there is no historical evidence that supports mortgage rate consistently go either up or down in a presidential election year.''

Mark Hulbert, columnist at Market Watch, agrees as well, stating, ''Try as I might, I could find no evidence that interest rates tend to be either higher or lower than average in the weeks and months prior to elections.''

Mortgage Rates and Elections

No Correlation Between Mortgage Rates and Presidential Elections

What Does This Mean for You?

So, what does this mean for you? Your personal situation, and whether or not you decide to lock or float, really depends. There is definitely some uncertainty involved as the election draws closer, however, it is more important to look at your own situation before making any decision. Some brokers and loan offices may user the fear of uncertainty to scare people into refinancing or buying, so it is important to be on the lookout for these tactics.

While the election's results can influence the market in one direction or another, there are two significant characteristics of the economy that should keep mortgage rates low for the foreseeable future:

1. Poor Unemployment Rate: June's non-farm payroll shows weakest 3 month growth since 2012. This will continue to put pressure on stocks and weaken consumer confidence. Investors will flee to the safety of bonds as unemployment rates remain high.

2. Foreign Economic News: The uncertainty stemming from Brexit, Britain exiting the EU, has spurred uncertainty, further decreasing mortgage rates .

Mortgage rates haven't been this low in years, so if it makes sense for you to buy or sell a house, then you should definitely take advantage of these low rates.


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