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Market Commentary – 8/12/16

Posted on August 12, 2016 by Conrad Juliá

It sure feels like a goldilocks scenario with the market being stoked by low-to-negative interest rates, slow growth, and low inflation. That said, new highs were hit this week for the troika of the stock indexes. The U.S. 10-year Treasury closed at a touch under 1.500%.

The ongoing benefits of massive global central bank stimulus include low debt in all sectors, including mortgages. As low as interest rates are in the United States, we may see interest rates go lower especially when considering 10-year Italian Treasury bonds are trading for .500%, a full percentage point lower than U.S. government debt. Go figure.

The downside to low rates is bank margin compression. That is one reason why we continue to remain biased toward locking in interest rates at these levels.

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These are the opinions of the author. For financial advice, please talk to your CPA or financial professional.

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(2) Disclosures

(1) Minimum FICO, reserve, and other requirements apply. Contact your loan officer for additional program guidelines, restrictions, and eligibility requirements. Rates, points, APRs and programs are subject to change without notice. Actual closing times will vary based on borrower qualiﬁcations and loan terms. All loans are subject to credit approval. (2) “Loan to Cost” (LTC) is defined as the acquisition price of the property plus the cost to build as determined by a bank appraisal. Contact your loan officer for additional program guidelines, restrictions, and eligibility requirements. (3) With an interest-only mortgage payment, you will not pay down the loan's principal balance during the interest-only period. Once the interest-only period ends, your payments will increase to pay back the principal and interest. Rates are subject to increase over the life of the loan. Contact your Insignia Mortgage, Inc. loan officer to determine what your payments might be once the interest-only period ends. (4) With an adjustable rate mortgage (ARM), the loan payment will adjust after an initial period and then adjust on a regular basis as set forth in the loan documents. For example, a “3/1” loan will have an interest adjustment 3 years after the loan closes and every 12 months thereafter. Also, the loan will be subject to annual and lifetime adjustment caps. Contact your Insignia Mortgage loan officer to determine what your payments might be once the fixed rate period of the loan ends. (5) Insignia Mortgage, Inc., is a real estate broker licensed by the CA Bureau of Real Estate, DRE #01969620, NMLS #1277691.