Mortgage rates: here’s John Schutze™s weekly update:
“Mortgage rates edged lower this week!
The impetus for the rate rally this week may be a long-awaited stock market correction. After touching multi-year lows in mid-March, the Dow Jones added 30 percent going into last Friday. It has since lost close to 300 points and as those dollars leave the stock market, they’re finding their way toward bonds. The demand is pushing bond prices up which, in turn, causes rates to fall.
The rally in rates picked up steam on the heels of April’s Retail Sales report. With figures off a half-percent from March and roughly 7 percent from 2008, investors are concerned that consumer spending may not be as strong into the summer months as previously expected.
Consumer spending is important because it comprises two-thirds of the economy and is believed to be the way out of the current recession. If expectations of a recovery caused mortgage rates to rise recently, it makes sense that a revision of those expectations would cause rates to fall.
Markets are fickle, however, and the slightest bit of “good news” could pump cash back into stocks at the expense of bonds.
Until then, however, enjoy the low rates!”
John is a loan officer with Bank of America and has an Austin mortgage blog with more news on local lending rates.