We’ve been hitting record lows again on mortgage rates and there are signs that a significant move lower is possible.
One of the analysts that we follow (Barry Habib: http://en.wikipedia.org/wiki/Barry_Habib) is predicting a move lower, based primarily on the following factors:
- Lower oil prices are resulting in stock market volatility which drives money to the safety of the bond market.
- Same lower oil prices will help keep inflation low, and thus remove incentive for the Federal Reserve to increase rates.
- Japanese and European central banks are at record lows on their rates, resulting in more movement of investment funds to the US in search of higher yields.
- US dollar is strengthening vs. the euro, which will result in even more foreign investment in our bond market (the currency swap leverages up the return on the bond yields).
These are strong trends with big impacts. If they continue to play out, we could benefit from some lower mortgage rates!