Rates are improving – are you wondering why? Well, the unfortunate aspect of mortgage rate improvement is that it comes as the bi-product of a failing US economy. Here is what we are seeing in the economy:
- Services index is slowest in18 months
- ADP jobs report is down
- Factory orders are down
- DOW has given up 1,000 points
What this all means is: people aren’t buying products and services. We are all holding on to our money and saving it to hedge against job loss and unexpected expenses.
With the economy struggling, investor dollars tend to flow into the safe haven of fixed income investments. This flow of funds into Bonds is what is driving mortgage rates lower, nearing their all-time lows. this trend can reverse very quiuckly, but mortgage rates should remain low for quite some time. When true job growth starts in the US, that is when we will see economic recovery and mortgage rates start to rise.
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