Actions in other countries can move our rates? YOU BETCHA! 

Back in 1987 I graduated with a degree in Economics and stumbled into this crazy career in the Mortgage Biz.  I did not want to work in NY, so I figured I would go work for a bank and use my degree.. and my love affair with the Mortgage business began. Even with my degree I never fully understood the effects of a global economy... That is until I started paying attention to interest rates on a daily basis.  Back in the 80's we had a big swing in interest rates with no apparent reason...  The cause turned out to be a tax law change in JAPAN. That's right, a Japanese Tax law change caused our interest rates to go up.  At the time there were a lot of Japanese investors buying in the US Credit markets and the new tax change for them made it less profitable to do so, so they pulled out.  When there are more sellers than buyers in a market the price goes down and in the credit markets it is an inverse relationship between interest rate and Yield. (Price down = Yield UP) Since then there have been numerous issues, Mostly flights to quality that have helped our markets, but the occasional hic up that have hurt.

FLASH FORWARD 20+ years:

This week was an unusual one. We had 2 international happenings in our credit markets:

• Wednesday: Russia Announces it will not be buying our Treasuries.  OH SH--! said our markets and rates went up
• Thursday: There was significant buying from Asian investors (mostly China) and they picked up big lumps of Mortgage Backed Securities.  A GREAT day, wiping out much of Wednesday's losses.

Interest rates often move on supply and demand issues. There has been a lot of supply in the markets and not enough demand, along with fears of inflation. These international factors just add some more fun into the mix.

As we are all well aware, the past few weeks have not been good ones for interest rates. Rates are up quite a bit from the lows we saw earlier this year, Still historically WONDERFUL, just not as low as our clients were teased by.

Did you know the average rate for a 30 year fixed mortgage over the past 40 years is 9.47%?  That certainly makes today's rates look very attractive!

Have a great weekend.

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com   or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

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