Mortgage rates keep rising after Trump’s election win

WASHINGTON — Long-term U.S. mortgage rates continued to surge last week in the aftermath of Donald Trump’s election win.

Mortgage giant Freddie Mac said Wednesday that the average rate on a 30-year fixed rate loan shot up to 4.03 percent, the highest since July 2015 and up from 3.94 percent a week earlier. The rate on 15-year home loans climbed to 3.25 percent, up from 3.14 percent last week and highest since January.

Long-term U.S. interest rates have climbed since Trump was elected Nov. 8. That is largely because bond investors believe the presidentelect’s plan to cut taxes and spend massively on roads, bridges, airports and other infrastructure could ignite inflation. When they foresee rising inflation, investors demand higher long-term rates and pay lower prices for bonds.

The yield on 10-year Treasury notes has risen from 1.87 percent on Election Day to 2.38 percent Wednesday.

The expectations of economic stimulus from tax cuts and higher infrastructure spending that are driving up interest rates have also pushed stocks higher. On Wednesday, the Dow Jones industrial average closed above 19,000 for the first time.

Still, rising mortgage rates pose a threat to the housing market. Low mortgage rates had fueled a rally in home sales. The National Association of Realtors said Tuesday that sales of existing homes rose 2 percent in October to a seasonally adjusted annual rate of 5.6 million — strongest pace since February 2007. Higher loan rates, along with rising house prices, could reduce demand for housing. The median price of an existing home has risen 6 percent over the past year to $232,200.