The question I’m asked daily is “Where do you think rates are headed?” Let’s use the image of a harbor with boats. The tide will ALWAYS raise and lower all boats. The tide is inflation. The boats are rates. Now from time to time storms will pass by and raise or lower the boats for a brief period, but the tide is the granddaddy, the irresistible force.
This week we saw storms enter the harbor as Brittan’s GDP came in negative which scared investors and caused money to flow into the US for safety. This lowered rates because if you’re going to give me your money anyway, I don’t have to pay you as much interest. Then new home sales came in higher than expected so that moved rates higher as it signaled an improving, inflationary economy. Other factors created up and down waves as well: US 4th quarter GDP, consumer sentiment, durable good orders, etcetera. These storms have kept rates in a channel for the last 6 weeks.
BUT FOLKS, our economy is improving, albeit slowly. Also, Moody’s stated this week (they are a major bond rating agency) that they may downgrade US debt sooner than previously thought – a debt downgrade AUTOMATICALLY raises rates. The combination will be like a full moon, raising the tide, pushing rates up, and nothing will stop it. So, as we’ve seen local storms keep rates in the high 4’s, at some point the tide will come in. Don’t wait too long.
This week 30 yr. fixed rates ranged between 4.625% & 4.875% depending on program, credit and points.
Sr. Loan Officer
NMLSR # 217991
OK License # MLO01963