Mortgage Rate Update

Election years bring a certain degree of uncertainty. The 2020 election faced this on incomparable levels. Historically, the market does tend to respond to uncertainty. On Wednesday 1/6/2020, rates spiked following the results of the Georgia run-off election. Generally, bond markets are very forward looking and any type of unexpected news, whether it's a pandemic or an election, can have a sudden dramatic impact on rates.  This is what happened in early January when Georgians went to the polls to determine the winner of the two Senate seats up for election in the state.  Markets were expecting a split government, resulting in very little change with Republicans in the Senate expected to revert to an obstructionist stance with the new administration. With the surprise sweep by the Democrats in Georgia, the door opened to the possibility that Democrats can advance their agenda which could mean increased stimulus payments and more aggressive government spending. More government spending means more debt, which means more bond issuance and greater supply, which means higher rates. The 10 year note jumped to over 1.00% for the first time since COVID that day and stayed there for the following few days. Rates started to recover during the week of 1/11 (as they have throughout the pandemic after previous spikes) and appear to have stabilized again near record lows. The long term projection is pointing to higher interest rates but for now the market held and showed another example of its resilience. For now, rates are at record lows and it's still a great time to refinance or get preapproved for a mortgage.

How long will good rates last?

The Federal Reserve has a few ways to keep rates low in the economy. An indirect method of rate suppression is to keep the benchmark rate, the federal funds rate, near zero. This rate level allows banks to borrow money at nearly no cost — which has a trickle-down effect on consumer borrowing and interest rates in general. The Fed’s current rate-friendly stance is beneficial for mortgage shoppers. But what does this mean for the personal finances of the average American consumer? It means you’ll likely have access to ultra-low rates for years. Perhaps not as low as they are now, but very low from a historical standpoint. If you’re ready to refinance, it’s a great time to lock in. If you have any questions about the mortgage process or if you want to inquire about getting preapproved, please contact: Faramarz Moeen-Ziai CrossCountry Mortgage, LLC 2987 College Ave Berkeley, CA 94705 Personal NMLS342090 Branch NMLS2020284 Company NMLS3029