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Stock market train wreck and stable dollar equals lower mortgage rates
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Stock Market and Mortgage Rates
The stock market has taken a dip and that's not good news for anybody's 401 k. Some have lost 10% in the past week and if you're on the brink of retirement and had your hopes up after the recent rally that can be unsettling. If you didn't believe McDonald's that the dollar is strong the Fed's optimism they can head off inflation may have convinced you. It has convinced investors around the world who have bought up 10 year treasury bonds seeking a safe bet.
Bonds up, yields down and mortgage rates down with them. After a recent rise from sub 5% levels the 30 year fixed mortgage rate of loans backed by Fannie Mae and Freddie is steadily improving. Usually turbulence in the market is a sure sign of improvement to the mortgage rates but not in the very rare occurence that foreign investors are afraid of US bonds. That's why the Fed's comments about inflation not being an immediate headache is so key in this scenario. Comforting to real estate agents across the nation who's morale took a shot to the chin when rates seemed destined to reach 6% for the first time in over a year just weeks ago is this reversal of rates. Keep in mind at this time last year the 30 year fixed mortgage was indeed over 6%. Desperate times call for desperate measures and that's why home loan interest rates under 5% has been and still is a top priority for the government. An announcement of a 20 billion dollar bond sale aimed at lowering interest rates has not recieved much attention but is part of the equation as well.
It's an everchanging economy but in the recipe for low rates is some powerful ingredience right now. Rates just may crack 5% in the days to come but beyond that is anybody's guess. If you are in the market to refinance or purchase a home you may want to ready youirself for the "rate lock".
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