07 Feb Stocks Falling Helping Mortgage Interest Rates
The technical move in the stock market continues to drive prices further away from their 200-day moving average, which is great news for mortgage interest rates. This level is the most influential of all moving averages, and a break above this could set off a massive stock rally that could push mortgage interest rates higher. Since the ceiling has held so far, mortgage rates now have a nice tailwind behind them, which will hopefully lead to softening rates in the near term. However, we still need to be cautious, as stocks could reverse course and break above this critical level. Although I don’t believe that will happen, it remains a risk.
Global growth concerns continue to build steam, with more and more economists jumping on the Recession 2020 band wagon. I remain steadfast in my belief that both housing prices and mortgage interest rates cannot continue to grow at the pace both are projected to climb by. I believe one or both will fall. This goes against what nearly every economist believed just a couple of months ago. However, as time passes, more are aligning with this point of view each day. This will likely present a great opportunity for people who obtained a mortgage in the past year to make steps lower using our no-cost refinance model, which is the best strategy in a reducing interest rate environment.
Mortgage bonds have a little room to improve before hitting the next significant ceiling of resistance. Since the potential improvements are limited, there is little benefit in floating. If you do choose to float, do so only if closely monitoring the markets.