Wow! The financial markets are so unpredictable and volatile right now.
Thursday, a week ago, it looked like rates had a chance to improve to levels we have not seen yet. Now, a few business days later, we are at 6 month highs. What in tarnation happened?
Here is the perfect storm that hit quickly:
1) The AAA rating of the US government became has been questioned and made a big topic
2) The Treasury is selling a record $162 Billion of US debt the week of 5/25
3) Consumer confidence rises
4) NABE saying recession may end in 3rd quarter
5) Several big names in the news talking about inflation being a factor once the economy turns around
So what happens from here? That's a tough one but here it goes: The markets are known to overreact and they have definitely overreacted this week. We should see a correction simply from the overreaction. Looking forward, the Fed still has availability to purchase substantial amounts mortgage-backed securities. We should improve from here. Will we get back to rates below 5%? Don't know.
For those who are waiting for rates to reach 3% before you act, let this be a wake up call. Sub-5% fixed rates are something we'll see possibly once in a lifetime. Take advantage of it before it's gone.
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