Take it from a huge Patriots fan and mortgage banker, deflated footballs aren't good, but deflation in mortgage rates is great!
One of the biggest surprises coming into the new year is the substantial decline in mortgage rates. We've been hovering in the 3.75% range for a few weeks now. I think it's fair to say that this caught even the most seasoned Wall Street professionals by surprise. The big question is; how long will it last? Of course we don't know for certain, however understanding the primary influences on the market, we can make an education guess. Interest rates are driven by a few primary factors; US economy, global economy, stock market (investment allocation), and geopolitical events (global unrest, i.e. terrorism, Russian sanctions, bad actors, such as Iran, and even the Japanese Tsunami). We have two of the four to thank for the recent decline in rates; global economy and geopolitical events, however; the US economy remains strong, and the stock market continues to climb.
So how long will this last....If we continue to see European central bankers flooding the market with economic stimulus, then rates will remain low. Factor this with falling energy prices, which is creating more deflationary, rather than inflationary risk here at home, and we're likely to see rates remain in the 3.75%-4.25% range through the first half of 2015. I will say however, markets always swing too far one way or the other, and when cooler heads prevail, swing back towards the center. Therefore, 30 year fixed rates at 3.625%-3.75% probably won't last for more than a few weeks. I'd expect the range will fall between 4.00%-4.25% as we enter the spring market. That being the case, if you're seriously considering a home purchase I would not wait until the proverbial spring market, and if you have an opportunity to refinance your mortgage, now is the time...
Comments(1)