40 Years of Election Year Rates

• According to Kelly, mortgage rates rose in more years than they declined during the 10 election years preceding 2004. Though rates fluctuate, depending on the type of loan, terms and what time of the year it is written, overall rates linked to the 10-year Treasury bond rate went down three times and rose seven times. In the election year of 2004, for example, the Treasury bond rate was around 4.8 percent during the first two weeks of June, up almost a point and a half from 3.2 percent a year earlier.
  
  

The Election of 1996

• On Sept. 24, 1996, a mere seven weeks before the presidential election, the Federal Reserve Board voted to leave interest rates where they were. Though some believed the move, or lack thereof, was politically motivated, economic conditions of the time suggest otherwise. In late September 1996, two major reasons for increasing interest rates -- creeping inflation and a shrinking economy -- were absent, giving the Fed good reason to leave interest rates alone.
  
  

The "Post-Election" Theory

• According to another election year-based mortgage rate theory, mortgage rates and interest rates in general tend to drop after a presidential election. However, after analyzing mortgage rates during election years 1972 through 2008, Dallas mortgage broker John Jones concludes that the post-election theory is a myth, as well. Though presidential and midterm elections can affect consumer confidence, which may eventually affect mortgage rates, the influence tends to be minor compared to influence of economic trends and the world's monetary policies.
  
  

The Obama Election

• One month after the election of Barack Obama in November 2008, the Fed dropped interest rates to an historic low, bringing the Fed funds target rate to 0 to .25 percent. This reduction, however, was just a continuation of dramatic rate reductions that started in 2007 with the Fed's first interest rate reduction in over four years. The reason for the reductions was an increasingly dismal economy, rather than the election of a new president.