Last Week in Review: The Remedy for Higher Rates
This past week home loan rates were essentially unchanged from the previous week, breaking a trend of higher rates since the beginning of October.
Bonds hate good news and there is still plenty to go around:
- U.S./China trade dispute progress
- Brexit progress
- Corporate earnings remain positive, as does the economic outlook
- Fed rate cut coming — more on that below
If the week was filled with good news, then why did Bonds and home loan rates remain steady?
There’s an old saying, “the cure for higher rates, is higher rates”, meaning that the recent uptick in rates was enough to attract investors searching for higher yield to buy Bonds, thereby halting the increase in rates.
Before we start celebrating and thinking we are on the road to lower rates in the days ahead, the Bond market must deal with a jam-packed week of news next week. The headline risk can easily cause the recent increase in rates to resume.
Bottom line: home loan rates remain near three-year lows, but up a bit from where they were at the beginning of October. As we head into a very important news week, if you are considering a home loan now is a terrific time to seize the opportunity before it goes away.