Last Week in Review: Fear Versus Hope Driving the Markets Again
This past week, Freddie Mac reported mortgage rates hit the lowest in U.S. history — 3.13%.
The improvement in rates is a direct result of jobs returning, lowering the risk of mortgage default, coupled with increased competition forcing the industry to “sharpen” pricing.
What happens next for rates?
We are watching fear versus hope play out again and the coronavirus is taking the headlines.
A spike in cases and hospitalizations in several “re-opened” states is causing fear, anxiety, and uncertainty, which Stocks hate and Bonds and interest rates love.
On the other side of the coin, there are many positive, optimistic, and hopeful reasons why Stocks remain elevated and are limiting the improvement in rates. These include:
Bottom line: With home loan rates at historic lows, housing demand increasing, and many positive forces at play, today makes an incredible time to lock at the best rates ever. If the positive forces mentioned win the day and a second surge in cases doesn’t reemerge, rates may not improve much further, if at all. Finally, remember that the 10-year Note yield has not moved beneath .60% for any sustained time during the darkest days of COVID-19. This means that in order for rates to improve much further, things may have to get even more uncertain than those times.
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