Tuesday, Fed Chairman Ben Bernanke said the “recession is very likely over”. The much better-than-expected August Retail Sales Report adds support to Ben’s claim.
Stocks improved on the day and mortgage markets / rates worsened.
Could the days of super low mortgage rates be coming to an end. Maybe. Maybe not.
Since September, mortgage bonds markets have been in rally mode and mortgage rates have declined substantially. Investors fled the relatively risky world of stocks and moved thier money into safer investments like cash and bonds, including the mortgage-backed kind.
Risk aversion is common when market uncertainty exists but last year’s aversion was so strong, by late-November, it had forced mortgage rates down to an all-time low.
Since November, however, rates have been on the rise. Stronger economic data and a general feeling of optimism and recovery have helped stock markets improve. A lot of those gains are coming at the expense of low mortgage rates.
If you’re wondering what mortgage rates might do going forward, pay attention to Mr. Bernanke when he speaks. If he sees economic recovery ahead, it’s probably going to happen.
It should move mortgage rates higher into 2010.
Posted by Scott Fowler. Scott can be reached toll free @ 877-627-9211 x 104 or email SFowler@HorizonFinancial.org. Visit Scott’s website @ www.ScottFowlerTeam.com.
