In an otherwise uneventful news week, the massive earthquake in Japan added to the global uncertainty and turmoil that has rattled markets recently. The 8.9 magnitude quake and numerous aftershocks were followed by a 23-foot tsunami, leaving thousands dead and disaster cost estimates are nearing $200 billion. Bonds rallied on the “flight to safety” trade, causing mortgage rates to fall to their lowest levels in nearly six months. Investors are worried about the potential impact on global recovery the event in Japan could produce. Japan is the world’s 3rd largest economy, the 4th largest exporter, 3rd largest importer of oil and 5th largest importer overall, so concerns are running high. Even before the earthquake, Japan’s economy had been struggling to recover from deflationary pressures and investors are concerned the government has little room to borrow the funds needed to support massive rebuilding efforts (Japan’s debt is already at 200% of GDP).
Currently, the 30 Year Fixed is 4.500% (4.630% APR) and the 15 Year Fixed is 3.750% (3.976% APR). Later this week, we’ll have the Consumer and Producer Price Indices, Housing Starts and Building Permits, Leading Economic Indicators and the announcement from this week’s Fed meeting. Do not expect any changes to the benchmark lending rate.