Nov-8-blog

Market Commentary 11/8/19

Interest rates have been on a tear as of late with the 10-year Treasury note moving almost 50 basis points over the last several weeks. The move up in interest rates is due to both domestic and global influences. 

Domestically, the job picture and consumer confidence remain strong, and some manufacturing indexes have picked up as of late removing the fears of a near term recession. Also, the Fed has been very responsive to the markets call for lower short term interest rates and their actions have steepened the yield curve. The stock market hasn’t helped the cause for lower rates as the “risk-on” trade has been in full bloom. Rounding out the case for higher interest rates is a positive commentary on phase 1 of the U.S.-China trade deal.

Globally, bonds have also risen as we’ve seen better-than-expected economic data out of Europe and prominent economists have opined that negative rates may be doing more harm than good. These factors have pushed yields higher. 

Don’t be too alarmed as we don’t foresee interest rates running away from current levels with inflation readings still running under 2.00%. However, as we stated previously, our belief is that positive news on the economy could pull the 10-year Treasury to around 2.00%.  

Mortgage applications have stalled due to interest rates moving higher. The low rate environment has put a floor on prices for sellers. Now with rates moving up, the question is how higher interest rates will affect home purchases in the coming months. Despite these trends, mortgage rates remain at very attractive levels, and we continue to advise locking-in.

In addition, we are adding a new program to our mix: bank statement loans starting at 4.25% for a 30-year fixed mortgage up to $3 million. Keep an eye out on our rates page for those details, or give us a call!

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