Republicans weaponize soaring US mortgage rates as part of pre-mid surge
Republican candidates in critical battleground races in the U.S. midterm elections are taking advantage of soaring mortgage rates to attack Democrats on inflation, as they hope a renewed interest in the economics will help them take control of Congress in November.
High gasoline prices have continued to serve as Republicans’ primary weapon on the campaign trail despite an overall decline in recent months. But the Federal Reserve’s sharp interest rate hikes this year have given them additional ammunition by triggering a rapid rise in mortgage rates to levels not seen since the 2008 housing-induced financial crisis.
According to the most recent data, the average interest rate on a 30-year fixed-rate mortgage in the United States has risen to around 6.7%, doubling from around 3% in January.
It has destabilized the housing market in many areas and raised concerns about affordability — two factors that are increasingly cited by Republican politicians, who far more blame the Joe Biden administration and congressional Democrats. than the Fed.
“It’s irresponsible government policy that spent billions of dollars that we didn’t have and then paid people not to go to work: that’s what fueled inflation. If they hadn’t done that, the Fed wouldn’t have had to react,” said Mark Robertson, a Republican who is challenging Dina Titus, the Democratic congresswoman from Nevada.
“I have affluent, gated neighborhoods, and then I have very modest homes in east Las Vegas. And the impact is especially on these modest and middle-class neighborhoods. These are the people who struggle the most. . . it really hurts them,” Robertson added.
Other aspiring Republican members of Congress hoping to win a seat on Capitol Hill and provide a majority for the GOP in the November election have been piling up as monetary tightening begins to bite.
In a tweet last week, Madison Gesiotto Gilbert, who is trying to win a House race in Ohio, attacked Washington’s “one-party Democratic control” for causing “historic inflation” and triggering the doubling of mortgage rates.
In a tweet this week, Tom Barrett, who is trying to unseat Elissa Slotkin, a Democrat from Michigan, posted a graph exploding what he called the “Slotkin/Biden effect”: an increase in the monthly mortgage payment needed for s offer a median US home for $1,698 to $2,547.
In another congressional race in Nevada, Sam Peters, the Republican challenging incumbent Democrat Steven Horsford, said the contrast in the state of the housing market in his area was dramatic compared to a year ago.
“Houses were flying. You couldn’t even put them on the market. They left in one day. . . Fast forward to now, there’s a lot more inventory, but people’s prices are overpriced because of interest rates,” he said.
Peters added that relief was not in sight: “There is a lot of work to be done to get our inflationary environment under control.”
The focus on housing and mortgages comes as Republicans try to refocus their midterm election campaigns on the economy in the home stretch of their races. By doing so, they hope to win over swing voters and keep their base energized, after Democrats regained ground in the wake of June’s Supreme Court ruling on abortion.
“There is general dissatisfaction among Americans with the state of the economy. For a lot of millennials, even a lot of Gen Xers, certainly Gen Zers, this is their first time living in a world of high interest rates and a world where things are more expensive,” Ben said. Koltun from Beacon. Policy research. “Gasoline prices are up, food is up, mortgage rates are up, housing costs are up. It affects everyone.
With the central bank likely to continue raising interest rates in a bid to tame inflation — most officials expect the fed funds rate to peak at 4.6% in 2023 — economists warn that mortgage rates shouldn’t back down anytime soon. This means that first-time home buyers will continue to be shut out of the market even if house prices fall from their peaks.
Fed Chairman Jay Powell went so far as to warn last month that the once-booming housing market “will likely have to undergo a correction.” The remark came at the press conference following the central bank’s decision to implement a third consecutive rate hike of 0.75 percentage points and raise the fed funds rate to a new target range of 3 % to 3.25%.
“There was an underlying [affordability] problem of addressing that and now we have this spike in mortgage rates, which has squeezed millions of people out of the home buying market. We’ve also seen very strong rent growth,” said Nancy Vanden Houten, chief US economist at Oxford Economics.
“It’s part of this larger problem of anything that costs more, especially things that are essential and eat up a larger share of low- and middle-income household budgets,” she added.
Robert Dietz, chief economist at the National Association of Home Builders, said the economic pain and political fallout from the housing crisis could extend well beyond the midterms.
“We’re not at the end of Fed tightening, despite what the markets are betting on, and there will be higher interest rates,” he said.
“Given where housing stands in relation to this particular economic cycle, how important rent is in terms of household fiscal challenges, and how important homeownership is, I think we’re more likely to see housing rise among high-profile political issues in the 2024 presidential elections,” Dietz added.
Democrats are trying to fend off GOP attacks on housing and mortgages by pointing to the fact that Republicans have announced no coherent plan to bring down inflation, despite passing legislation to bring down the cost of essential goods such as prescription drugs. . The Biden administration also announced measures to boost the supply of affordable housing, which should help ease housing-related expenses.
Changes in the housing market may be even more politically salient in fast-growing battleground states such as Arizona, Georgia and Nevada, which are particularly prone to boom and bust cycles. . A CNN poll released this week found Republicans had a slight edge over Democrats in three statewide races: for secretary of state, governor and a middle seat in the Senate.
Housing prices have also soared in metropolitan areas in several states with competitive Senate races. Median sale prices have risen 34% to 39% in Phoenix, Las Vegas and Atlanta over the past two years, according to data from real estate brokerage Redfin. However, these have started to ease recently as mortgage rates have soared and housing stock has increased, following a prolonged decline in housing supply following the recession.
For Steve Baird, a seasoned Las Vegas-area real estate agent who is backing Robertson in his bid for Congress, the speed and scale of the disruption and change in the housing market this year has been both startling and worrisome.
“It’s just anemic right now and sellers need to be very competitive and willing to accept discounts,” he said. “It’s always hard, you know, to get out of the market we’ve been in.”