The sell off in stocks over the last few days has created a surprising silver lining for consumers: very low interest rates as the bond and stock markets work in inverse relationships. AS stock prices fall, the demand for bonds increase which yields a lowering of the 10yr Treasury Yield which mortgage interest rates are most closely tied to. The stock market and world market volatility is creating wonderful refinance and purchase opportunities with regard to low rates.
The 30-year fixed conventional mortgage has dropped to 4.25% percent, which is the lowest level for 2011. If you are a home buyer waiting on the sidelines, this is probably one of the best opportunities to purchase.
My cell phone has been ringing so much that it has been overwhelming with these extraordinary low rates.
I have field a 300% increase in call volume and requests for information to lock in these rates.
Logic would say that the downgrade in the US Debt would actually increase the rates, but it had the opposite effect with investors running to US Treasuries with the falling stock market.
So despite the downgrade, rates for loans and mortgages fell in tandem with the US bond market.
As the markets remain volatile, investors will probably shun riskier assets and stay in US Treasuries which will bode well for mortgage rates.
At some time in the future, there will probably be higher rates for consumers, but for now low rates are front and center