The 10 Year Note had its biggest weekly gain since May as unrest in Libya drove investors to the safety of the US Government Debt and raised concern that surging oil prices may stall the recovery in the United States. This reflects mortgage rates…which also had its biggest rally in months dropping 100 basis points in pricing (about a .25% to the actual rate). Crude Oil on the other hand increased $8.00 this week to the largest weekly gain in over 2 years due to Libya’s Muammar el-Qaddafi’s politics and fears of the Oil Production in the Middle East.
In general, investors around the world will want to put their money somewhere safe in the coming hours, days and weeks until things settle. Billions of dollars will leave the riskier markets and come back to the safe haven of the Bond markets of the United States. This is good for some reasons as it will bring down mortgages rates just in time for the spring markets, a much needed boost to the housing economy is long overdue and will spark home sales. The flip side, this will hurt consumers at the Pumps, but it will also have an effect on the manufacturing markets, you know the ones, those that are directly related to the housing markets, Lumber Yards, Builders and so on, which could push new construction prices higher. Just the fear alone of the economy stalling, will bring down mortgage rates, it also promotes fear in the consumers ability to spend.
Now is one of the best times to purchase a new home. Mortgage Rates are still posting in the mid to hi 4’s and are trending downward, these rates are still in a range that we have not seen since the 1960’s and before. Home values are teetering near the bottom depending upon the location and in some areas are starting to increase in value.
For more information on Mortgages, Rates and other Housing Questions, feel free to call or email anytime.
Bill Nickerson
Vice President Mortgage Network
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