A Historical Look At What Happens After A Presidential Election

We are right around the corner from the presidential election and many of my clients have asked me how the election will affect interest rates.

Historical archived data from the Primary Mortgage Market Survey from Freddie Mac which dates back to 1971 might shed some light on what usually happens to interest rates after an election.

The numbers below are for 30 year fixed rate mortgages:

 1972 – Richard Nixon won in a landslide victory over George McGovern.
Prior to the election the rate was 7.43% and it increased slightly to 7.44% in December.

1976 – Jimmy Carter won over Gerald Ford.
Prior to the election the rate was 8.81% and it declined a bit to 8.79% in December.

1980 – Ronald Reagan defeated Jimmy Carter.
Prior to the election the rate was 14.21% and it increased to 14.79% in December.

1984 – Ronald Reagan ran for a second time and defeated Walter Mondale.
Prior to the election the rate was 13.64% and in December it declined slightly to 13.18%.

1988 – George H. Bush defeated Michael Dukakis.
Prior to the election the rate was 10.27% and in December it rose to 10.61%.

1992 –  Bill Clinton defeated George H. Bush.
Prior to the election the rate was 8.31% and a month later it decreased to 8.21%.

1996 – Bill Clinton defeated Bob Dole.
Prior to the election the rate was 7.62% and it decreased to 7.60% in December.

2000 – George W. Bush defeated Al Gore.
Prior to the election the rate was 7.75% and it fell slightly to 7.38% in December.

2004 – George W. Bush defeated John Kerry.
Prior to the election the rate was 5.73% and it increased slightly to 5.75% in December.

2008 – Barack Obama defeated John McCain.
Prior to the election the rate was 6.09% and decreased to 5.09% in December.

2012 – Barack Obama defeated Mitt Romney.
Prior to the election the rate was 3.38% and decreased slightly to 3.31% in December.

The fear most people have that rates will take a dramatic hike after an election is truly not warranted.  Its a good reminder that the state of the economy determines the overall change in interest rates.