We are, unbelievably, almost at the half way mark in 2016 and we're still enjoying ultra low mortgage rates.
This week, following disappointing job data, in particular, rates fell to very near the best levels we have seen all year.
The background story to what's happened to rates this week is bound to increase speculation on their future direction, as there are now a number of variables in play that could see them drop even further.
Today's news that job creation remains weak, despite a low unemployment rate of 4.7%, will do nothing for the confidence of investors. May saw the lowest level of job gains since September 2010 and gains over the past quarter are near half of average monthly gains over the previous 12 months. Even the decline in overall unemployment by 0.3% was almost entirely due to employees leaving the work force.
Mortgage rates are very closely tied to investor confidence. In times of risk aversion, bonds such as Mortgage Backed Securities (MBS) gain in popularity as they are seen as a relatively safe investment. This has the effect of keeping rates low.
While no one should be pleased that job creation is at a lower than expected level, there does now seem to be a trend of disappointing growth and this is likely to continue to be a negative factor for investors, favoring further falls in rates.
It should also be remembered that the race for the Whitehouse is now really gaining momentum and this will almost certaintly feed uncertainty in financial markets.
There is also a significant emerging overseas factor that could encourage even further risk aversion.
This month Britain votes on whether or not to stay in the European Union. An exit has been gaining popularity in recent polls. Britain has the world's fifth largest national economy, so the fallout of the so-called "Brexit" would create huge uncertainty in markets, as the economic consequences are so hard to predict. If the "Brexit" happens, it's likely that bonds will gain in popularity, at least in the short term, again possibly triggering new falls in mortgage rates.
The preponderance of the evidence would suggest that we'll see even cheaper home loans. However, what we should remember is that nothing is ever certain in this modern world and a whole range of other circumstances could come into play and we might suddenly be looking at rate rises.
As ever, the best situation to work with is the one right in front of us now, which sees rates at near to historic lows. There has rarely, if ever, been a better time to buy, or sell, than right now. Quite simply, waiting is gambling, acting now has the benefit of relative certainty.
Why not call us today to discuss the best options, given your individual situation and needs.