Mortgage Rates Remain Strong
Low mortgage rates continue to be the “silver lining” (or many would argue “gold” or “platinum” lining) amid both domestic and international economic instability, with rates maintaining historic lows for the last several weeks. Concern over another U.S. recession, along with continued European debt issues, have investors relying heavily on the relatively stable U.S. Treasury bonds and government backed mortgage debt. In fact, history was made last week as the 10-year Treasury dropped below 2.00%.
There are a few positive economic points floating around the market this week, including talks surrounding a Euro-zone bond that would be intended to compete with U.S. Treasuries, helping provide support for the debt crisis that continues to plague that region. There are also whispers of additional stimulus from the Federal Reserve, where a third quantitative easing program may be introduced. Look for news here late in the week as Chairman Bernanke speaks at a Federal Reserve symposium in WY.
As we look forward, it will be important to keep a close eye on signs that the economy is recovering. It will likely take several positive reports, or news of another round of economic stimulus, to have enough of an impact on the economic outlook to cause rates to materially rise in the short term. Also, with Qaddafi’s regime in Libya potentially crumbling, energy stocks are also advancing slightly as stability in the region may create economic opportunity.
Although interest rates are important, getting a loan closed is also important. More borrowers are asking lenders questions around operational capacity and the ability to close deals in a timely fashion. Some large banks have been known to take six months or more to close a refinance in this rate environment. This means longer periods where the borrower keeps their higher interest rate and payments. With mortgage applications at record highs, locking in your loan with the right lender who can help you get it closed is important.