After a rise in mortgage rates following Donald Trump’s election victory, rates have inched back down to nearly 4%.

In costly markets like Southern California, small rate changes can mean saving thousands of dollars over the life of a loan — even though rates are at historic lows.

The monthly mortgage cost of a median-priced San Diego County home has gone up about $100 since the day before the election, but it could be worse. It was up to $164 at the end of December.

The average for a 30-year fixed-rate mortgage was 3.59% on Nov. 7. It started to climb after the election, hitting 4.32% on Dec. 29. In some good news for potential buyers, the average rate has dropped to 4.04%, said Mortgage News Daily.

Experts say rates went up after the election because investors were moving away from government-backed assets — like bonds — and putting money into stocks. Now, investors are again seeking bonds. Mortgage rates typically track the yield on the U.S. 10-year Treasury.

Chris Thornberg, economist and founding partner of Los Angeles-based Beacon Economics, said many investors thought the new president would lower taxes and regulations, making sense to put more money into stocks. But, he said recent moves by the Trump administration (failure to get health reform passed, postponing tax reform) make bonds seem more advantageous.

“The market overall thought Trump was going to ride into town and taxes were going to get cut and there would be strong fiscal stimulus,” he said.

Thornberg said Trump’s policies were starting to look more like those of his predecessor, Barack Obama.

“The net result is we are simply going back to where we were last March, an economy that kind of moves along at a nonchalant pace,” he said, “an economy with low interest rates.”

Regardless of who is president, mortgage rates are at historic lows. The average has been 8.22% for the last 46 years and 5.31% since 1990, said the Federal Reserve Bank of St. Louis. It hit a low of 3.31% in November 2012, and a high of 18.63% in October 1981.

So, what does this mean for potential buyers?

Matthew Shaver, a San Diego senior mortgage consultant with Finance of America, said most predictions show interest rates rising. If you’re thinking of buying in the next 18 months, buy now,” he said.

If you’re thinking of buying in the next 18 months, buy now.

Source: SDuniontribune by Phillip Molnar