We want to make sure you are aware that mortgage rates have dropped to their lowest in the past nine months. The drop has come quickly and unexpectedly, particularly in the past 3 weeks. This is an opportunity for home buyers, use of home equity and for people that have closed on a loan in the last nine months to improve their loan.
Mortgage rates generally go the opposite of the stock market – there are actually many more factors than that but at a high level.
During 2018, the stock market grew to record levels, peaking in September. This was pushed by low unemployment, strong corporate earnings, moderately growing economy and few major international economic issues. In the second half of 2018, the Federal Reserve was concerned that the economy slowed its growth and noted that it might not raise interest rates as much or at all in 2019.
Trade tariffs with China impacted certain US market segments, oil prices slumped, European economic issues with Italy and Turkey and the UK’s ongoing exit from the EU caused global economic concerns. The stock market began pulling back and pulling back for a 20% reduction by the end of the year and the word “recession” is being used as possible for 2019. In contrast, the bond market hit its low on November 9 and from there started a rebound back to the level of April 2018.
Mortgage rates which correlate to the bond market continue to drop. Today, mortgage rates are where they were in March of 2018.
This is an opportunity to take advantage of the market change as a purchaser of a home, use home equity or to improve a loan that closed in last nine months.