The interest rates had a very crazy 48 hours. It came in two phases.
Phase one – The Federal Reserve on Wednesday did what was totally expected for months. They dropped the Fed Rate .25%. The first reduction in 10 years. Fed Chairman Powell indicated that it was a mid-cycle adjustment. The domestic economy is doing well, but it was an insurance move against the downside risks of foreign economies doing poorly, and trade policies are adding uncertainty to how international companies approach their business.
The bond market basically took it in stride, and didn’t have an extreme reaction, as the rate drop was already built into the rates.
What may have helped the rates some was the Fed’s decision to stop their Quantitative Tightening early. The QT was the liquidation of bonds and mortgage backed securities the Fed had purchased during the Quantitative Easing, i.e. buying the bonds and mortgage backed securities to artificially lower rates, to stimulate the economy.
Phase two – The financial markets were calm Thursday morning, digesting the Fed’s move… then Trump hit the news conveying the negotiations with China weren’t being productive, and additional tariffs were going to be put in place in September. Immediately the long bonds interest rates dropped another .10% to levels not seen since 2016. The market’s perception is more tariffs will add additional uncertainty to the economy. See the chart for the extreme drop on Thursday.
The 10 year note and 30 year fixed mortgages have dropped substantially since the highs last October.
The 10 year note is at 1.90% at the time of this blog. The new jobs report will be released on Friday morning, and the 1.90% is between two lines of resistance and support at 1.77& and 1.92%. We’ll see which level will be tested next.
It’s a great time to refinance or lock in rates. Call me if you have any questions, or want to crunch numbers.
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me.
Ron Henderson GRI, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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