With recent global tensions mounting between the U.S. and Iran, I wanted to take a break from elaboration on major mortgage topics: this time, we’ll briefly discuss the relationship between news and mortgage rates. As we’ve discussed in our article on rate locking, mortgage rates are controlled by mortgage-backed security bonds - closely correlated with the U.S. 10-year Treasury yield.
Again, the 10-year Treasury is the best indicator of rates. Keep your eye on it if you want to know which way rates are moving. In short, when the global economy falters, investors want less risky investments; they’ll pull their funds out of the stock market, and put money into the 10-year Treasury because it is the among the safest, most-liquid financial assets out there. When investors feel more confident to take riskier investments, mortgage rates suffer. The reverse is also true...
This brings us to our topic at hand: how bad news affects mortgage rates. While it may seem morally counterintuitive, bad news like the current U.S. / Iran dispute is good for mortgage rates. As of last week, rates hit their lowest levels in over a month. The effects can be sudden, such as these recent lows caused by the president’s asssassination of an Iranian general, or more drawn out. Only a couple of weeks ago, the major news was the U.S. / China trade war. This has lasted for months, fueled by tweets, statements about possible deals and resolutions, etc. Overall, this bad news has slowly helped rates lower to 3-year lows (where they still hover).
Of course, be concerned about bad global news from every other point of view, but when it comes to mortgage rates, be ready to act! I’d recommend keeping your finger to the pulse of rates / news, and staying in touch with loan officers. A good loan officer can help you interpret recent news, and advise you on next steps.
To chat with one now, give Prospect Financial Group a call at 858-605-0952, or use our live quote generator to price up rates yourself.
Prospect Financial Group
948 Garnet Avenue
San Diego, CA 92109
NMLS: 349089 | BRE: 01837707
Jason Vondrak has been in the mortgage industry since 2004 and co-founded the mortgage brokerage Prospect Financial Group in 2006 in San Diego, California. Today he serves as President and CEO of Prospect Financial Group and the president and founder of Prospect Property Group, a real estate development company, established in 2012.
"I've had the privilege to serve in an industry that exists to ensure homeownership remains among the top priorities of government and citizens alike. Over the years, it has been a pleasure working alongside homeowners, real estate professionals, and business associates combining efforts and teaming up to help homeowners realize the dream of home ownership."
We've been helping customers afford the home of their dreams for many years and we love what we do.
Company NMLS: 365482
948 Garnet Ave
San Diego, California 92109
Phone: (858) 605-0952