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Could Elon Musk hold the key to lower mortgage rates?
Home sales are at multi-decade lows due to high home prices and 7% mortgage rates.
Many buyers have been priced out of the market. The share of first-time homebuyers in the housing market has fallen to the lowest level in 43 years, according to recent data from the National Association of REALTORS®.
Against this backdrop, some buyers might be looking forward to lower mortgage rates as one way to improve their chances of buying a house.
And the key to lower mortgage rates could be in billionaire Elon Musk’s hands, the NAR’s chief economist Lawrence Yun said Wednesday in a statement after the release of the latest inflation data.
“The overall inflation rate is normalizing, and the Federal Reserve can move away from its current restrictive monetary policy,” Yun said, “which means further cuts to the short-term interest rate in upcoming months.” And that could pressure mortgage rates down.
Yun was referring to the consumer-price index in October, which rose 2.6% from a year ago, with the housing component accounting for over half of the increase.
Despite an uptick in October, the overall trend still shows stabilizing prices, Yun said. The inflation rate has come down from a recent peak in June 2022, when consumer prices rose nearly 9% on an annual basis.
While the White House and politicians don’t control the Federal Reserve, Yun said that one way the government can address high mortgage rates is to rein in the federal deficit.
“Tariffs can be inflationary in the short term, and budget deficits can push mortgage rates up,” Yun said. “Given that tax increases appear unlikely under President Trump, meaningful cuts in government spending are required to control the deficit. Let’s see what Elon Musk can do in the newly created role.”
Trump on Tuesday appointed Musk and onetime Republican presidential candidate Vivek Ramaswamy to co-lead what is being called the “Department of Government Efficiency,” tasked with eliminating government bureaucracy.
“Musk will be in charge of government efficiency with the goal of thinning out unnecessary staff and programs,” Yun said. “We do not know where or when he will focus. The bulk of spending is currently off limits to any cuts, like Social Security.”