This week, the 30-year mortgage loan interest rate of Fannie Mae saw a slight decrease, yet it remains higher than many people’s initial expectations. Investors are adjusting to the potential economic impact of Trump’s victory, with some experts bluntly stating that the key to lowering mortgage rates may lie in the hands of billionaire Elon Musk.
As of the week ending on November 14, the average 30-year mortgage loan interest rate of Fannie Mae dropped by 0.01% compared to the previous week, reaching 6.78%. According to recent data from the National Association of Realtors (NAR), the proportion of first-time homebuyers in the housing market has dropped to the lowest level in 43 years.
In October, the Consumer Price Index (CPI) increased by 2.6% annually, with housing inflation accounting for over half of this increase. Lawrence Yun, Chief Economist of NAR, believes that this signifies a potential further reduction in short-term rates in the coming months, which could push down mortgage rates.
Mortgage rates do not directly follow the direction of federal funds rates; they often move in sync with the 10-year Treasury bond yields, which in turn tend to predict the next actions of the Federal Reserve.
Financial markets are also concerned about President-elect Trump’s proposed tariff policies, which could raise consumer prices. According to a daily survey conducted by Mortgage News Daily, by November 13, all these concerns had pushed the 30-year mortgage loan rates up by over 7%.
“Tariffs may trigger short-term inflation, and budget deficits may push up mortgage rates,” Lawrence said. “Given that tax increases under President Trump’s leadership seem unlikely, significant cuts in government spending would be needed to control the deficit.”
On Tuesday, President Trump appointed Musk and former Republican presidential candidate Vivek Ramaswamy to jointly lead the so-called “Department of Government Efficiency,” tasked with eliminating government bureaucracy. Trump described this mission as the “Manhattan Project” of this era. The Manhattan Project was synonymous with the U.S. program to develop nuclear weapons during World War II, helping secure victory.
However, the positions of these two billionaires do not depend on congressional approval. Their work is expected to conclude on the 250th anniversary of the signing of the Declaration of Independence on July 4, 2026.
Therefore, Lawrence looks forward to what Musk can achieve in this newly created role. “Musk will be in charge of government efficiency, aiming to reduce unnecessary personnel and projects,” Lawrence said. “We do not know where or when he will focus his attention. Currently, most expenses are not subject to any cuts, such as Social Security.”
Experts point out that mortgage rates closely track the 10-year Treasury bond yields, meaning they will rise and fall accordingly. If the government borrows more money, higher rates are needed to attract debt buyers. A larger federal deficit will result in higher mortgage rates for buyers.
“Today, we are facing enormous budget deficits without being in an economic recession,” Lawrence said. “Clearly, President-elect Trump will not stop tax cuts — he will extend or expand them.”
“Due to the (Biden) administration borrowing too much money, available mortgage funds will decrease,” Lawrence added. “However, if the Trump administration can devise a credible plan to reduce the budget deficit, mortgage rates could decrease.” And the success of this plan will depend on how efficiently Musk’s department operates. ◇