Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
At the time of the writing of this article, the presidential election was yet still too close to call. Pre-election day polls had former Vice President Joe Biden with a commanding lead over President Trump. As the ballots got updated on election day, the in-person votes helped Trump improve significantly and made the contest a lot closer than most predicted. Americans were glued to their screens well into the morning, witnessing a historical election in every aspect.
Without getting into the literal politics, I wanted to address a few critical mortgage considerations that might be impacted depending on the election outcome. The stock market rallied into election day and surged on election day itself – something that hasn’t happened in decades. It was fascinating to see how the pre-market numbers vacillated as the colors changed on the various states across the U.S. map.
The market already knows most of Trump’s policies and seemed comfortable with his re-election if that were to happen. That is why we saw the massive market rallies into election day. On election day, as many of the too-close-to-call states started to turn blue, the market was more comfortable with the notion of a Biden presidency because republicans gained critical victories in the Senate. The GOP triumphs would cause gridlock and prevent Biden from pushing through stiffer regulations and higher taxes.
Over the past few weeks, bond yields had been rising on the expectations that a big stimulus package from Democrats could result in massive government debt and inflation. We saw the 10-year U.S. Treasury increase from a low of 0.52 basis points to a four-month high of 0.88 in a few short weeks.
With potential hold-up in the Senate, the market is not expecting any immediate extreme changes is and can adapt towards it the future. It is for that reason we saw the 10-year drop over 10bps on election day.
A Biden presidency might trigger a weaker economy, as he is more likely to impose Covid-19 restrictions that would cripple business and growth. To combat the weakness, they would introduce a massive stimulus and more bailouts. Again, these measures would only hurt mortgage rates.
So who is the victor of the election? I believe the winner without question is “YOU!” As Abraham Lincoln famously said, “Elections belong to the people. It’s their decision.” In that regard, congratulations to the United States of America for the record turn-out at the polls this year. 2020 has been an unparalleled year that required many difficult decisions regarding health, social, and financial choices. As the election showed, the decision to pick a new commander in chief was no different in its challenge. Some voted red, others picked blue, but to me, the fact that every American has the opportunity to choose is the most significant victory in itself.
The same holds true in business. Having a choice is a victory for the consumer! Competition is a great motivator to have a company or service provider work hard to earn your business. As an entrepreneur and CEO of Approved Funding, I know that there are many options and choices for mortgage loans. We are out there “campaigning” every day. We work tirelessly to ensure that our expert guidance, our targeted advice, our unparalleled service, and market leadership, and of course, our aggressive interest rates are the best choice and decisions for our clients and business partners. When the wrong President is chosen, it might only be a 4-year term; with the wrong mortgage, it is a 15 or 30-year duration that will cost you tens of thousands of dollars and more.
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