French Election Impact on Mortgage Rates


French Election Impact on Mortgage Rates

I have tried to provide some perspective and analysis on how public policy and political elections can have an impact on mortgage shoppers in the San Francisco market. Even abroad, election results and policy decisions ultimately affect mortgage rates back here at home.

A reminder, that US mortgage rates dropped sharply last July in the aftermath of “BREXIT,” which was the vote in which the country chose to leave the European Union (EU).  The aftermath of this special vote was global investment clocking towards safer havens, specifically US mortgage backed securities.  Considered to be some of the safest investments in the world, they are also the most popular whenever there is chaos or fear abroad.  The more money coming into them, the lower US mortgage rates go.

France is holding their preliminary elections this week, and there is a chance that San Francisco mortgage shoppers could be in for similar rates as those from the Brexit result last summer.  11 candidates are running and the top 2 will advance to a summer run-off.  The two that are likely to advance are Marine Le Pen and Emmanuel Macron.

Le Pen is riding a very similar wave of nationalist populism, similar to the one that elected President Trump here in the US.  She is pledging to not only leave the EU (referred to now as “FREXIT”), but reform the economy by tackling immigration.

Macron is a bit of an outsider that no one really gave a chance to.  He is running as a centrist and while very young, doesn’t have any major party backing in the nation.  He supports liberal but business-friendly policies to boost the lagging French economy and is not championing an exit from the EU at this time.

An French exit from the EU would sent European and other global markets into a bit of a spin, likely resulting in lower rates here for Bay Area homeowners and hunters.  The choice to stay in the EU would likely level off investor nerves and restore some normalcy back into the conversation.  Time will tell, but I will continue to monitor the primary results and lead up to the general election this upcoming summer and how it will impact people who want or already have a mortgage right here in the Bay Area. Email Me for more info or about rate quotes.

Arjun Dhingra