Wednesday’s Federal Reserve statement made mortgage rates drop right back to the record lows from several weeks ago. Since we hit that low, traders have been looking for some sort of clear direction on where the market would move next. The lack of rate positive news had made rates steadily creep higher over the last 3 weeks. Yesterday the Fed released a statement confirming they would continue to buy bonds and keep rates low until 2014. This statement coupled with low inflation reports are starting to make Quantatative Easing #3 ( QE3 ) rumors perculate through the bond market.
The market reacted positively with mortgage rates moving all the way back down to previous records. Strange as it may seem some investors were caught off guard with the big drop in rates, as the Fed’s actions are actually inflationary. Gold prices closed up over $35 dollars an ounce yesterday confirming that some investors believe inflation will be an issue. The reason the move to lower rates is surprising is that inflation is the mortal enemy of low rates and usually short-term moves by the fed like the one mentioned above would be trumped by longer term inflation fears.
What does this mean to you? Don’t fight it! Wall Street typically trades on rumors and sells on news. So the rumor of the Fed continuing to make money easily available is good for rates today but as soon as it is confirmed look for rates to spike.
Take advantage of today’s historically great affordability and low rates. If you have been thinking of buying a home, your new mortgage payment could be lower than the going rents in your market. If you already own a home with a good mortgage or have paid on your current mortgage for a long time, please let me help you look into a shorter term mortgage. It could save you thousands of dollars over the life of you loan.
Please let me be of assistance in helping you answer questions about financing your home.
