How will developments in Egypt impact mortgage rates?

30 years ago when Egypt’s President Mubarak took power a mortgage applicant here in the US wouldn’t have paid any attention to geopolitical tension overseas for purposes of monitoring mortgage rates.  However, in today’s global economy disruptions anywhere on the globe can have a ripple effect to other places.  So how has political turmoil in Egypt impacted the markets here at home?  Thus far, aside from Friday’s 166 point slide in the stock market we haven’t seen too much spillover.  What do we need to watch for moving forward? 

The WSJ’s MarketBeat blog is watching oil prices, gold prices, Israeli stocks, the US Dollar, and US Treasury prices as barometers.  Mortgage rates are likely to follow suit with US Treasury prices.  If violence and uncertainty surrounding the outcome of the protests continues to grow then we’d expect investors to seek “safe” investments which are typically fixed-income assets here in the US (including mortgage-backed bonds).  This move known as a “flight-to-safety” would put downward pressure on rates.  However, if the transition to a new regime is relatively smooth then we likely won’t see too much of a change.

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