Wall Street has been the best roller coaster ride around this past week! What a move… from one of the worst days ever to 2 of the best! Typically what’s bad for Wall Street is great for rates, but these are not typical times. Below I will explain a little about what is driving Wall Street and mortgage rates.
The recent credit crisis has fueled uncertainty among investors in both stock and bond markets. The bond markets are what drive mortgage rates and usually bonds compete with stocks because of the difference between them. People looking to invest in bonds need more stability and people looking to stocks expect higher returns because of the higher risk. The current crisis is unique because it has great impact on both markets. While stocks and bonds are usually affected differently by financial news, right now the news is affecting them both in similar ways.
#1. If the mortgage market is seen as risky or even in collapse, the bonds that are backed by mortgages are not very attractive.
#2. If the mortgage market is seen as risky or even in collapse, stock investors do not want to invest in banks or mortgage lenders.
The recent involvement by the government has done two important things for both markets.
#1. Mortgage bonds are now seen as safe again because the government backed Fannie/Freddie, which are the largest bond guarantors around. RESULT – lower rates!
#2. Financial companies are now seen as buying opportunities because the government has stepped in to stop short-selling, back money-market funds and add confidence so these companies can go back to doing business. RESULT – Stock Market Rebound!
I am recommending my clients lock in their interest rates now. The positive effects from the government moves are priced into our rates already and good news doesn’t last long. All this market movement was more a sigh of relief than a calculated move based on fundamentals. Inflation is still keeping pace with growth and rates are super low. I expect rates to start heading back up right away.
30 Year Rates are averaging 5.750% right now.
My 30 Day Prediction: RATES WILL INCREASE
This is my opinion only and you should not make a decision about locking or floating your interest rate based on this only. You should speak with a licensed loan officer about your particular situation.
USDA Loans are available in certain areas.
NEWS FLASH: Myers Park Mortgage has 97% conventional financing again!!!
INVESTMENT Programs Fannie Mae has increased the pricing hits for investment properties. 90% Financing is still available but average rates for 90% financing are around 7.00% with points.
Refinance today with rates as low as 5.5%!! No-closing cost loans available. Lock in rates now before they go back up!
For more details contact…
Olan CarderMyers Park Mortgage Direct: 980-721-7478 [email protected] www.mycharlottelender.com
Olan Carder contributes articles to Homesfortmill.com on a regular basis. He works in the Charlotte NC metro market which includes Fort Mill, Tega Cay, Lake Wylie SC,
Olan has recently started his own mortgage blog. If you are looking for more mortgage tips and information, check out his new blog at http://charlottemortgageonline.com/.