Aug
15

Lock A Low Mortgage Rate ASAP

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It’s human nature to observe an anomalous trend, and believe it’s “the new normal”.

When the trend is “mortgage rates are falling”, though, thoughts like that can cost you money.

“Logical Thought” For Rates

Mortgage rates have dropped to all-time lows. A new Refi Boom has begun. The talking heads say that this is the start of the boom; that rates will cut the 3s before long.

I say “maybe, maybe not”.

Like everyone else, I have no idea what rates will do tomorrow, much less two hours from now. Mortgage rates move all day, every day and it’s not just economics that push them around. Government policy plays a role, too.

So, at times like this, I refer back to Aristotle.

Thousands of years ago, Aristotle created the syllogism and, today, it remains the core of Western logical thought.

A simple syllogism goes like this:

  1. Mortgage bond markets are unpredictable
  2. Morgage bond markets are the basis for mortgage rates
  3. Therefore, mortgage rates are unpredictable
Syllogisms remind us that predicting mortgage rates is a fool’s game.

Why Mortgage Rates Are Falling Now

Mortgage rates have been falling since April 2011, and recently picked up steam. This is for a two main reasons.

First, the world’s economy is slowing and shaky. Wall Street money is flowing away from risky assets and toward the relative safety of government-backed securities. This includes mortgage bonds, of course.

And, second, the Federal Reserve just pledged to keep the Fed Funds Rate near zero percent for at least another 2 years. The move itself didn’t drop rates, but the logic behind the move did. There are two parts to the conversation:

  1. The Fed expects slow growth for the next few quarters
  2. The Fed is unconcerned with inflation

Historically, conditions like these promote low mortgage rates.

Owing to Aristotle, we know that low mortgage rates won’t last forever. Therefore, don’t get greedy. Take a look at mortgage rates today and lock one up if your budget can benefit.

Mortgage rates are unpredictable. Lock your rate today.

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Categories : Interest Rates

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