Volatile Week For Economy and Mortgage Market
The broken record continues with volatility overwhelming the stock, bond, and mortgage markets this past week. We tend to experience this type of up and down movement in bear markets. Economic reports which come in at above or below expectations are met with a buying or selling frenzy, much like the sheep leading the sheep. Market psychology plays a huge impact on short term movements, particularly in times of economic uncertainty.
So far this year, market movement has created a virtual stalemate for mortgage rates in general. Mortgage rates have actually trended upward from the January lows, but continue at excellent historic levels. In fact, those refinancing with loan-to-value ratios under 80% are still experiencing sub 6% 30 year fixed mortgage rates. I continue to advise my clients to pull the trigger on short term dips in mortgage rates.
In my opinion, the stalemate in current mortgage rates is the result of two major factors. First, this year's reported poor economic data and future uncertainty is leading investors to the safety of bonds, which causes the bond yields to decrease and mortgage rates to decrease. Secondly, this same economic uncertaintly, with financial liquidity issues, and housing market concerns is creating an increase in the mortgage premium risk spread, which brings an increase to mortgage rates. Add these two components together, and the tug of war flag is still in the middle. Thankfully for those currently refinancing or buying homes, the recipe is still cooking some tasty mortgage rates.
Excuse me while I replace my broken record with another one.
Inflation and the housing market continue as the enemy to low mortgage rates. We continue to experience a weak dollar and rising energy costs, coupled with a weak housing market. So far, the dominos have not fallen, but the risk is there. The Fed has pretty much announced no further rate cuts in this cycle, which should help the dollar. Energy costs continue to rise with no end in sight.
The housing market could be the white stallion to ride in and save the day. We are experiencing stabilization and actual increases in home value in certain pockets of the US. Stabilization in the home values is key to the economic recovery and would go a long way toward stabilizing mortgage rates, while increasing lender and investor participation in the mortgage market. Our majestic galloping hero still has quite a ride ahead, but at least he's finally on the trail!
May the Mortgage Rates be with You!
Refinance Tool Box
So far this year, market movement has created a virtual stalemate for mortgage rates in general. Mortgage rates have actually trended upward from the January lows, but continue at excellent historic levels. In fact, those refinancing with loan-to-value ratios under 80% are still experiencing sub 6% 30 year fixed mortgage rates. I continue to advise my clients to pull the trigger on short term dips in mortgage rates.
In my opinion, the stalemate in current mortgage rates is the result of two major factors. First, this year's reported poor economic data and future uncertainty is leading investors to the safety of bonds, which causes the bond yields to decrease and mortgage rates to decrease. Secondly, this same economic uncertaintly, with financial liquidity issues, and housing market concerns is creating an increase in the mortgage premium risk spread, which brings an increase to mortgage rates. Add these two components together, and the tug of war flag is still in the middle. Thankfully for those currently refinancing or buying homes, the recipe is still cooking some tasty mortgage rates.
Excuse me while I replace my broken record with another one.
Inflation and the housing market continue as the enemy to low mortgage rates. We continue to experience a weak dollar and rising energy costs, coupled with a weak housing market. So far, the dominos have not fallen, but the risk is there. The Fed has pretty much announced no further rate cuts in this cycle, which should help the dollar. Energy costs continue to rise with no end in sight.
The housing market could be the white stallion to ride in and save the day. We are experiencing stabilization and actual increases in home value in certain pockets of the US. Stabilization in the home values is key to the economic recovery and would go a long way toward stabilizing mortgage rates, while increasing lender and investor participation in the mortgage market. Our majestic galloping hero still has quite a ride ahead, but at least he's finally on the trail!
May the Mortgage Rates be with You!
Refinance Tool Box
posted by Jim Bisnett at
6:45 AM
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