Skip to main content

See also:

What do Interest Rates and Steely Dan Have in Common?

What do Interest Rates and Steely Dan Have in Common?
What do Interest Rates and Steely Dan Have in Common?
Tom Priester

They both go back Jack and do it again

Those of you who know me, know I'm crazy about real estate. Those of you who know me well know that I am just as crazy about music. Good music, great music not Justin Bieber! The songs on my iPod start alphabetically with The Abyssinians and go to Zoot Sims with thousands of songs in between. I awoke this morning, and like I do most mornings turned on my laptop to get the day started. As always, iTunes was playing and I heard the classic song by Steely Dan from their very first album way back in 1972;

You go back Jack do it again
Wheel turnin' round and round
You go back Jack do it again

And I then look at the daily screen update of interest rates and start singing along, "You go back Jack do it again". Once again for the 5th week in a row there it was; interest rates defying all logic or common sense were down again. And down fairly substantially from last week. The average overnight rate on a 30 year fixed conforming loan dropped 7 basis points over the last week from 4.38% down to 4.31%. A new 11 week low taking us all the way back to before the Fed announced they were definitely pulling back on their 85 billion dollar purchase of United States debt instruments.

The same purchases they have been using for almost 5 years to artificially lower interest rates were going to be cut monthly by over 10% as of January 1st. Who was going to pick up the slack and how high would this push rates are the questions that came to my mind. But January 1st they kept their word and slowed their purchases by 10 billion dollars. And interest rates dropped, and dropped again, and again and again. For five straight weeks. They went back Jack and did it again.

So it is a great time to get that new home under contract, lock in a great interest rate and enjoy. But remember that next week an entirely different song may be playing. Always interesting, always fun.

Fins up...........