Twelve Days Going Down

For 12 days mortgage interest rates have either held steady or improved. Because of this improvement, interest rates just hit a three month low! Not only have rates improved, but lenders are offering improvements in the form of reduced closing costs and higher lender credits. All this adds up to big savings for you and your family.

If you have stocks, you may have noticed that while interest rates are getting lower, so is your investment portfolio. The stock market has been reacting to more speculation about when the Federal Reserve will ultimately begin it’s pull back.

There is a very delicate relationship between the economy, interest rates, and the stock market. Right now, when the economy produces weaker numbers than expected, stocks tend to fall, but interest rates, instead of going up, fall as well.

You’d expect interest rates to move in the opposite direction of the stock market, but because of the Federal Reserve, interest rates have actually been moving with the stock market. This anomaly is happening because the Federal Reserve said the will reduce pumping money into the economy when it starts showing improvements. Right now the economy isn’t performing as good as expected and so the stock market dropped. On the other hand, each piece of poor economic data increases the chance that the Federal Reserve’s pullback will be delayed one more month, allowing rates to improve.

If all this seems a little wacky to you, that’s good, because it is wacky. If you need someone to explain it in more detail, please feel free to give us a call.