While it's far too early to call it a consistent trend, mortgage rates have started to fall again.
They've ended the last two weeks lower, following a pretty sustained upward path that can be traced back to last November's election.
The certainty that an election result inevitably brings with it, plus a real feel good factor surrounding the direction of the economy, resulted in stocks going on an extended rally.
Such a rally can reduce the popularity of bonds, which have a reasonably direct effect on the upwards or downwards path of mortgage rates. Put very simply, mortgage rates tend to fall when bonds are popular, usually in periods of risk aversion for one reason or another.
Bonds have been an incredibly popular safe haven investment in recent years, while confidence in the economy has been growing after the years of recession. Until we got a result, last year's presidental race fueled uncertainties, but once the the winner was announced stocks went on a very significant and prolonged rally, thus diminishing interest in bonds and creating an upward pressure on mortgage rates.
We therefore have gone from near record low rates a few months ago to what many would consider to be a long overdue market correction above 4% for a standard 30 year fixed-rate home loan.
But this increase has had virtually no effect on the incredible levels of buyer sentiment in the market and we still need to remember that, even at the current rates, home loan interest is still very, very low, if we take an historic perspective.
So why have we seen a noticeable downward rate trend in recent days?
At least part of the answer appears to be new market concerns about the new presidential administration being able to deliver the promised growth strategy changes as quickly as anticipated, having run into choppy waters of late. The Fed has also made it clear that it won't be raising short term interest rates in an aggressive manner.
Bond enthusiasm has consequently again started to rise, with the resulting effects we're currently seeing in the form of slightly lower mortgage rates than recently.
Of course what no one knows at this time is whether rates will continue to fall or if the recent upward trend will soon find its feet again.
Either way, we think it's useful that you gain at least a very basic understanding of some of the dynamics that affect rates, so you know what might be happening when you make an application.
As always in these matters, it is essential that you seek the advice of a mortgage professional who can provide specific advice in your own situation. Why not contact us today and we can put you in touch with the area's top home finance specialists.