Mortgage Rates at Near Term Lows

After hitting up against the strong ceiling of resistance that has held mortgage interest rates back from making further improvements, bond prices are now falling lower.  At this point, we can expect to see bond prices work their way down to the floor of support, meaning that interest rates are now as good as they will be in the short term.  The current ceiling has been in place for months. Considering stock prices continue to set new record highs, mortgage interest rates have been exceptionally low in this strong stock market environment.

Despite multiple indicators pointing towards a pullback in the market, many economists now believe that the US will escape a recession.  Although I believe that the Fed taking action to both cut interest rates as well as to stimulate the markets with additional quantitative easing will push back the date of a recession, I don’t believe that a recession will be avoided all-together.  I think by 2021 or 2022, we will see a see negative growth in the US economy for at least two consecutive quarters, which is how a recession is defined.  I believe we will see a continued slowing in 2020, but not a recession until sometime after the election.  I believe that the next presidential term will face some significant economic challenges.  For now, let’s all enjoy our continued prosperity.

We will maintain a locking bias.