Interest rates and mortgage backed securities met all time lows last week on 3 separate occasions. These historic levels have only been reached one other time, back on February 2, 2012, and have been fueled by the fears of a Greek euro exit, deteriorating health of the Spanish banking system, and the stock market’s steep sell-off. As the lows were reached with interest rates, the markets seem to have once again found this as a ceiling of resistance, meaning some sort of catalyst will likely be needed to break through the ceiling and avoid getting pushed back lower.
In the FOMC minutes released last week, several members noted “that additional monetary policy accommodation could be necessary if the economic recovery lost momentum”, however, “one participant noted the potential risks and costs associated with additional balance sheet actions.” The markets will be on standby to see how this unfolds in coming meetings.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
There is little news slated to come out this week that would have a major impact on rates. Investors will be taking cues from the headlines out of Europe and results from Treasury auctions. Facebook will act as a barometer for the other social media stocks as the Dow, Nasdaq and S&P look to rebound.
New homes sales figures are due on Wednesday at 9 am CT. Initial jobless claims and durable goods will be released on Thursday at 7:30 am. The week will close with Consumer sentiment at 8:55 am on Friday going into the holiday weekend.
Here’s our strategy for the days and weeks ahead…
It’s a great time to be buying or refinancing with interest rates at historic lows. Looking back at our previous attempt to break through these levels, we saw rates climb one half percent in 45 days, with some stretches moving .25% over a one or two day span. While we don’t see the catalyst for this to happen on the calendar, any positive news coming out of Europe or our equity markets will give investors a reason to make a quick buck by selling their bonds and buying stocks, causing interest rates to suffer. If you’re in a short time frame (less than 30 days), be ready to lock at a moment’s notice and make sure that your loan officer or mortgage planner has a strategy in place to lock in your rate as news unfolds.
The stock and bond markets will be closed on Monday for Memorial day. Next week’s market update will be released on Tuesday, May 29th.
+Patrick Glaros empowers people to find their best home loan option. Through planning and education, and a goal-oriented approach, Patrick and the team at Dallas Mortgage Planners have one common goal: Help clients make an informed decision to choose the best home loan for their unique situation. Find other articles written by Patrick.
