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Mortgage Interest Rates Settle Down

Toward the end of last year investors in both the bond and stock markets experienced a period of anxiety as it appeared as if the Federal Reserve would be in an aggressive mood to continue to raise interest rates. The stock market had a particularly difficult December.

Then, statements from the Federal Reserve began to become more “dovish”, that is, it appeared as if the Feds would not be making several interest rate hikes in 2019, but were becoming more “data dependent”. In other words, the pressure came off the markets, stocks rallied, and interest rates for mortgages began to fall.

Currently rates for 30yr mortgages are in the low 4’s:  4.25 to 4.5 range is common.

Stocks of home builders have been rising along with the broad stock market, and there is increasing optimism that 2019 will be a good year for real estate.

The rental market continues to be “tight” and rental rates have been rising, along with home prices.

The easiest way to track the path of mortgage interest rates is to watch the price of the 10yr treasury notes, easily obtained on the major financial web sites. The 10yr treasury note futures contract reflects the opposite trend of interest rates. When the 10yr contracts are rising interest rates are falling, and when the contracts are falling, interest rates as rising. The 10yr (TY) hit a low on 10/5/18 and took another dip on 11/8. Since then, however, the TY contracts have been rising and mortgage interest rates falling, reaching a low on 1/4/19. Since then rates have been generally drifting sideways, indicating some stability in the interest rate market.

Hopefully, this stability will continue through the year.

Posted by: loffmanblog on February 16, 2019
Posted in: Uncategorized