Over the last several months, we’ve seen some very dramatic roller coaster rides for the economy and mortgage interest rates. Between the Federal Reserve threatening to begin pulling out of the bond market and the political battle over the Affordable Care Act, the debt ceiling, and keeping the government fully funded; the market has been having a tough time staying reliable.
Now that the government is temporarily funded, we are hopeful we can get some consistency and dependability for interest rates and the housing market. One thing that could really throw a wrench at that is the fact that the whole debate over the debt ceiling is going to come up again as it expires in the first part of 2014.
If the debt ceiling begins another political battle (and it probably will), it could result in more unsettling feelings about the future for our economy. This would result in economic uncertainty, which usually drives interest rates down.
Yes, as the economy worsens, rates actually tend to improve. This happens primarily because unreliable market conditions lead investors to buy bonds instead of stocks. The bond market has a direct impact on interest rates, so as the bond market improves, so does interest rates. It may seem like an unusual relationship, but it’s one that is time proven.
Kerry Greenwald, owner at Creekside Mortgage, made the prediction that economic conditions would drive rates down from now until the end of the year and possibly into the first quarter of 2014. While we hate the circumstances that cause the rates to go down, it does provide excellent opportunities for homebuyers to jump into the market.
Creekside Mortgage, Inc is a Veteran owned and a Veteran operated company. We serve military families and Veterans primarily through the VA loan program. If you or someone you know has questions about getting a mortgage, give us a call at 1.800.920.5420.