You read here last week regarding the elections and the impact on Wall Street, or at least the lack thereof. Historically, interest rates have ignored presidential elections with very little reaction. And Real Estate Investingthe day before the election that very same holds true. The benchmark FNMA 30-yr bond traded down -1/32 this morning and is not reacting to either candidate. However, what is interesting at this point might very well be equities. Stocks on the Dow were as high as 350 in light of FBI Director Comey’s letter to Congress stating he will not bring charges in light of the 650,000 emails found on a laptop owned by Huma Abedin’s husband. Apparently, over the weekend the FBI reviewed those 650,000 and found nothing that would harm Clinton. It’s likely that stocks aren’t cheering a potential Clinton victory but the uncertainty an extended investigation would present has now vanished.

 

Instead, interest rates are paying more attention to economic data and ignoring the polls about who will become president. Typically, with such a rally in stocks, the tradeoff would be bonds, including mortgage bonds. Historically, when investors rally in stocks, they sell their bonds and free up cash for a greater returns that stocks can provide. No guarantee, but yields from bonds are extremely low. It’s just curious how stocks are trading and mortgage bonds having no reaction.

This in turn translates into interest rates for real estate investors buying single-family homes, condos and 2-4 unit properties in the 3.50% range on loan amounts up to $417,000 in most areas. This coupled with rental rates still on the rise means we’re probably looking at a relatively stable interest rate environment. It’s certainly been a wild, extended campaign and I think we’ll all be glad it’s over with tomorrow, but bonds are simply ignoring it.