Hi all: I hope you're well! The last week in the mortgage business has been a wild ride. Prior to August 1st, interest rates for a 30 year fixed loan were in the range of 4.75% if everything lined up. Then things got volatile!
First was the announcement of the raising of the debt ceiling. You'd think the markets would be calmed by this but, as my Sales Manager so eloquently put it this morning, the lower mortgage interest rates that resulted were counterintuitive. What actually happened is people moved their money into longer term treasuries as a hedge. This lowered interest rates.
Then Standard and Poor's lowered the United States' credit rating. This also led to a flight to safety. As many of you are aware, the Dow Jones Industrial Average dropped over 700 points in one day last week. Again, investors sought the safety of treasuries.
This week, the Federal Reserve indicated they really don't see any prospect for a swift recovery before 2013 at this point and opted to leave short term interest rates alone for now. Again, the market was spooked. Here's the bottom line. We are presently seeing mortgage interest rates at record lows again. And I think this trend will continue for the near term. The world economies are struggling (Italy, Greece, Portugal, and Ireland to name a few) and people are realizing that recovery is a bit away.
What can you do? If you're in a 30 year fixed mortgage, it might be right to refinance if everything lines up. Perhaps you want to even shorten the term to a 15 year, for example. One interesting thought is if you're a realtor. Your client may have paid cash for their home. With interest rates so low, it might make sense for them to take out a mortgage, especially if it would allow them to go buy another property.
I wish you well. Remember to breathe deep and get used to market volatilty. For now, it is here to stay! Have a great day!
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