Various sources of fear and uncertainty, including the euro-zone debt crises, stagnant growth in GDP and the FED’s announcement that mid-term economic outlook is bleak, combined to cause a sell-off in the major equity markets on Thursday. When investors flee stocks, they generally seek so called ‘safe-havens’ in the bond market. One of those favorite havens is the mortgage backed securities market. When funds move into the mortgage backed securities market quickly, it sends a signal to bond makers that investors are interested not so much in rates of return, as security. Since security is attracting those investors and not high returns, the interest rates paid to investors can decrease. The result is lower interest rates for mortgages which we saw occur in a big way on Thursday. Coming into Friday, some consolidation is expected as investors move, albeit with trepidation, back to the equity markets looking for undervalued stocks. This should cause a slight increase in mortgage rates for Friday over Thursday making Friday a less than perfect time to lock. The overall trends in the market place indicate that mortgage rates are likely to continue downward in the coming weeks creating new opportunities to lock in lower rates.
So what does this mean in plain english. Get all your ducks in a row, speak to a Lender, and get your paperwork prepared … now!!! As soon as the rates drop, we can jump on it and the Lender can lock the rate straight away. Take advantage of drops, which are likely to be very brief intervals rather than long opportunities.
In this market, those equipped to move quickly are best positioned to take advantage of favorable conditions. Bottom line, if you’re thinking about purchasing, it’s time to get the paperwork prepared – get the horse before the cart – and act!
courtesy of Adam Hebner @ Lime Tree Lending Group