Financial markets have sent a forceful message that the era of super-low interest rates is coming to a close.
The day before Thanksgiving isn't typically a busy time in the home mortgage business. Then again, it isn't a typical year.
First, there was real estate developer Donald J. Trump's surprising victory in the presidential election.
Then interest rates for mortgages spiked to more than 4 percent — rising faster in the days since the election than they have in more than three years, when fretting over their persistently low levels has consumed economists, policymakers and investors alike.
That partly explains why C. Stuart Kiehne, president of Annapolis-based Redwood Mortgage Services, was in his office Wednesday, running numbers for clients newly concerned they would miss their shot at favorable rates.
"I'm just taking care of the panicky people that all want to lock in," he joked.
The surge in interest rates that followed Trump's win signaled the incoming president's market-moving power. But analysts said that for home sales and residential construction — a sector that fuels more than 15 percent of the country's economy — it's not clear how Trump might affect the market.
Typically, higher rates make it more expensive to buy and lead to fewer sales. That's what happened in 2013, when purchases dropped off in the second half of the year after the average 30-year mortgage rate climbed past 4.5 percent.
But economists and other analysts said they haven't scrapped their forecasts for positive growth next year, given general economic improvement and the chance that Trump — a developer — will introduce policies that help the industry.
"We want to wait a little bit longer, get some more specifics about how different policies might change," said Michael Fratantoni, chief economist at the Mortgage Bankers Association.
The trade group cut its outlook for refinancings after the rate increase but maintained its forecast of 11 percent growth in home purchase originations next year to $1.1 trillion.
"My sense is the direction of what's happened is consistent with where we were headed before but it seems to have accelerated the timing," he said.
Trump has promised tax cuts and de-regulation of the financial and homebuilding industries. He and others say that could boost real estate by making it easier for banks to lend and bringing down the cost of new houses.
"I'm going to cut taxes big league, big league. We're having a massive cut in taxes," he told a meeting of the National Association of Home Builders in August, where he described the industry as "close to his heart." "We're having a massive cut in regulations and that includes banking regulations for you people because it's impossible … to go get mortgages."
In the short term, some economists say those policies could be enough to counteract any decline in home sales prompted by higher interest rates.
But analysts are worried Trump's plan to take harder lines on immigration and trade deals might harm household formation, the construction industry and the economy more generally.
"We think specific policies that Trump might implement with respect to the housing market actually are likely to be more positive for both supply and demand than negative," said Ralph McLaughlin, chief economist at Trulia. "However we think there are looming clouds [related to] more macroecoomic changes that might happen, which might drive down demand."
Given the divided sentiment over the election results, consumer confidence is another question mark, said Lawrence Yun, chief economist for the National Association of Realtors. While the economy has appeared to be picking up, with stronger wage growth and lower unemployment, households that didn't back Trump may be worried.
"Given that half of the people just don't feel good about what's going to happen in the next two years, next four years, they will retrench, they will hold back and that could also play a role," Yun said. "Traditionally the two important variables were jobs and the mortgage rate. Maybe this time around consumer confidence and other less measurable aspects could be at play."
The increase in interest rates, which is tied to trading and sales of U.S. Treasury notes, has been fueled by seemingly contradictory factors.
On the one hand, investors are optimistic that Trump policies, including tax cuts and infrastructure investment, could fuel economic growth and inflation. Rates also are creeping up in advance of a December meeting of the Federal Reserve, which has signaled a plan for a hike for months.
But the higher rates also reflect reduced demand for Treasury notes, which had been favored in recent years as a safe investment in a volatile period.
Economists and others said they expect the higher rates to stick, but they said it's difficult to predict how much higher they will go.
"The question is whether [investors are] anticipating enough of what is coming or too much," said Alessandro Rebucci, an assistant professor of finance at Johns Hopkins Carey Business School, who said there is the potential for mortgage rates to increase two or three percentage points over the next three years. "The early move was very large …. There may be a lot more to come."
So far, rates remain about where they were at the end of last year, leading some to say they do not expect a major impact on housing activity, even if some, like Redwood Mortgage's Kiehne have gotten more calls.
"Some [clients] … are calling and asking us to re-run numbers based on the new rate environment," Kiehne said. "Obviously it will affect the statistics for the affordability, but for the average couple or person buying a home, I don't see it as a dramatic change."
A lot will depend on the policies Trump and a Republican Congress put into place.
Cindy Ariosa, a senior vice president and regional manager at Long & Foster, who oversees offices throughout Maryland, said possible scenarios include "the good, the bad and the ugly" — ranging from a better market lifted by tax cuts and easier credit to fears of the demise of the 30-year mortgage. Long-term mortgages could be at risk, she explained, if the new administration and Congress decide to privatize on Fannie Mae and Freddie Mac, the federal mortgage agencies, as called for by some conservatives.
Still Ariosa said she anticipates modest growth in 2017.
"We're looking for a healthy market next year," she said.
Mark Semanie, chief operating officer of Old Line Bank, said he's taking a wait-and-see approach.
"We're two weeks in and everything is based on people betting what might happen…," he said. "The markets are optimistic but it has to translate into something more real in the long run."