Las Vegas Real Estate
The stock market seems to be in free fall these days and this is good for mortgage rates. I wrote a post on August 9th (click here) talking about the problems in the sub prime loan market. I mentioned that weakness in the stock market can help mortgage interest rates since investors tend to adopt a flight to quality strategy.
The article mentioned the possibility of the Dow Jones Industrial Average reurning to the 11,000 area. The chart above shows that we are now approaching the 12,000 mark and there is a threat that it may go lower. You’ll note in the next chart (the 10-year Treasury Note yield) that rates have been moving down in simpathy with the stock market.
Remember that the rate on the 30 year fixed mortgage tends to mirror the movement in the 10-year Treasury Note yield. It is my belief that investors have been pricing in a rather large 3/4 point cut in the fed funds rate later this month.
What strategy should you be considering?
The markets may well bounce and hold these levels and if this occurs funds will start to move out of bonds and back into stocks. The market may continue to dive; another 1,000 points can come very quickly. Here again when a bottom is put in, people will move back into stocks. Eventually mortgage rates are going to stop going down.
It is time to prepare yourself in advance of the event. Get yourself pre-approved and start looking for that house now! If you are thinking about a refinance get started now!
I was working at UBS as a financial advisor in 2000. At that time technology stocks were selling at incredible multiples. That is not the case today. I think we may be getting closer to a bottom and this could mean that mortgage rates may go higher in a few months.
Never hurts to get ahead of the game.
Give me a call at 702-351-7912.
