Mortgage rates benefited from the volatility in the stock market yesterday.
Stock markets around the world faltered yesterday as concerns over the integrity of the global credit markets persist. As investors reinvest their capital into “safer” investments such as bonds mortgage rates stand to benefit.
However, this trend may reverse in the next day or so as investors respond positively to government interventions around the globe. In the US the Fed has announced plans to guarantee loans in the commercial paper market which corporations depend on to support day-to-day operations.
In addition, rumors on Wall Street are swirling that the Fed will make an emergency .50% cut to the Federal Funds rate prior to their October 29th meeting. I want to remind readers that a cut to short-term rates DOES NOT mean mortgage rates will automatically dip as well. However, the emotional response to the fact that the fed is making another “emergency” move may help mortgage rates.
These are VERY volatile times making movements in mortgage rates difficult to predict.
Current Outlook: floating long-term