Mortgage Rates Drop To New Lows
Why? Read on.
Nazis, White Supremacists, Russia, North Korea. That’s what the news has been about, but while you were tweeting, the financial markets are showing that they are scared.
Even with record highs of the Dow (which is not the best barometer of what’s going on), a very low unemployment rate and real estate prices in the clouds, the rates on mortgages are back to the mid 3’s for a super clean Fannie Mae loan.
Why? First, the U S Bond market and mortgage backed-securities are safe havens for investors from around the world to park money when they think the you know what may hit the fan. Even with our current POTUS, they feel that the American financial system will be strong.
But, add to that the slow growth numbers of jobs and the economy, the slowing of inflation (thanks to the internet) but the prevelance is the sense of fear that investors have about the aforementioned global crisis.
Contrary to old school beliefs, the time of the year, the amount (or lack of) of mortgage loans applied for and how a bank feels has nothing to do with the rates. It is market driven. Period. And the market knows something.
Yes, we are headed to a slowdown. If it gets bad, the mortgage rates will go into the 2s on a 30 year fixed. The way the experts thought it would go is not what has turned out. The Fed raised a few times thinking we are on the way to real recovery like they saw in the past, but it did not turn out that way.
Add to that the incompetence of Washington to get tax reform and other fiscal policy passed has also made investors go to safety.
Watch the bond market. It’s the best tell for the current and the future of where the smart money is going.