How the 2025 elections could influence mortgage rates — even in an off year

Unlike midterms in 2026 and the presidential election in 2028, this fall’s 2025 elections didn't decide who sits in the White House or which party controls Congress. Aside from a few high-profile races for governor and mayor, this year’s races didn't make national headlines.

But that doesn't make this year’s election cycle totally irrelevant to the broader economy and to mortgage rates.

Off-year elections can affect local housing markets while also serving as an early indicator of the bigger races on the following year’s ballot. And, at least one election in 2025 could have a direct impact on the coming 2026 battle to control Congress.

2025 elections: A barometer for the national economic mood?

Off-year elections can act as a political temperature check. When the party not in power gains ground in state or local races, it can signal shifting voter sentiment ahead of the next major election cycle.

These kinds of races can influence the way investors perceive future economic conditions, especially when election results contradict the way voters in a state typically behave.

However, the two gubernatorial races on the ballot this fall, one in Virginia and one in New Jersey, played out as expected: The Democratic candidates won in states that tend to favor Democratic candidates.

These two elections aren't likely to influence investor sentiment on a national level.

Prop 50: A direct line to next year’s Congressional races

Another race, California’s Proposition 50, could have a more direct effect on the future of our economy and long-term investments.

Voters in the Golden State overwhelmingly approved Prop 50 which could increase the number of Democrat-leaning House districts California.

Putting more Democrats in positions to win House seats in next year’s midterm elections could affect national politics and economic policies in big ways next year.

For example, the current government shutdown could be playing out differently with a different political balance in the House.

Local elections shape local housing markets

Economists react to national headlines about national races, but many of the policies that shape housing markets are decided far from Washington. Zoning laws, property taxes, and land use regulations, all of which help shape housing affordability, are mostly under local and state control.

In off-year elections, voters choose mayors, city councils, and other local officials who directly determine how and where homes get built. Cities that elect leaders favoring new development or streamlined permitting could see more housing supply in the coming years.

Other civic leaders may tighten restrictions, potentially constraining supply and driving up home prices even if national mortgage rates remain unchanged.

These local shifts can create highly regional housing dynamics. They’re a reminder that “the housing market” isn’t one monolithic entity, but thousands of local, interrelated markets moving in their own directions.

Home buying choices are personal, not political

Elections can influence the economic landscape, but an individual’s home buying decisions typically come down to the buyer’s needs, not their political opinions.

A family’s choice to buy or refinance depends more on job stability, life milestones that call for more or less living space, and long-term financial goals than on short-term rate fluctuations.

Average mortgage rates rise or fall in response to market trends, but timing the market for interest rates perfectly is nearly impossible. For most borrowers, financial readiness matters far more than the latest election results or political stalemates.

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