Mortgage rates are always subject to fluctuations and the whims of the market (investors), and this was perfectly on display last Tuesday (April 3). Here is a summary of what occurred:
– The Fed released their minutes from the March meeting.
– From these minutes, we learned that the Fed thinks the economy continues to experience weak growth, and that it is leaning against further intervention (Quantitative Easing). There is also uncertainty about the future of Operation Twist after it expires in late April. Operation Twist is a bond buying and selling operation used to bring down interest rates.
– Another small nugget from the report suggested the Fed might revise GDP slightly upward.
– The Dow quickly drops in the wake of the report.
– The bond market worsens amidst a small sell off.
– Interest rate costs increase by 1/2 a point.
All of this occurred within a few hours. Now, for those of you that have read our blogs here in the past, and follow our website, you know that typically when uncertainty plagues the stock market, the U.S. bond market improves (because investors look for safety), and interest rate costs drop. Well, in this case, everything became worse, and nobody really knew why. Investors were reacting to the news, but it wasn’t based on any fundamental reason or actionable data.
The markets settled down and so would interest rates. To begin the week, rate costs have again dropped between 1/4 and 1/2 point. Overall, this puts two-week drops between 1/2 point and 1 point. The 30-year fixed currently sits at 3.5 percent (3.653 percent APR) and the 15-year fixed is at 2.750 percent (3.007 percent APR). For more rates, see our Monday Rate Update. Remember, this is all happening after rates went up for about 1 or two weeks. All of this is a nice reminder to avoid having your vision clouded by sudden sparks, and instead take the long-term view. Rates have generally stayed very low, and until a major jolt to the market, they will likely stay there. Don’t be like the traders who see the Fed minutes and believe they need to make a move – stay calm and logical.
If you missed it, check out a few great articles from last week. We wrote a step-by-step guide to improving your credit score, and a look at why the new appraisal process (under new HVCC guidelines) is a headache for everybody. We also did a fun review of Morro Bay secret gardens, which got quite a lot of feedback. Check in this week with our Professional Insight blog for articles from landscaper Evan Moffitt (from KD Janni Lanscaping), and lawyer Eric Parkinson (from Parkinson Law).