Will the Stock Market Be Affecting Mortgage Rates?
The stock market right now is being rather affected by oil prices. As crude oil rises above $143 a barrel, the stock market is in a bit of trouble, falling as companies expect cuts into their profits. But this falling stock market news has another implication — that there will be an effect on mortgage rates.
The greater demand for mortgage bonds led to lower mortgage rates on conforming home loans and this would have never happened if the Fed hadn’t set the table for a mortgage bond market recovery.
This week, therefore, as the stock market goes, so should mortgage rates.
If stocks are up, rates should be up. If stocks are down, rates should be down. This is happening because — at least for now — the mortgage bond market is serving as a safe haven from Corporate America.
Right now (and for the past couple of sessions), the stock market has been down. And current mortgage rates are down.
Mortgage rates often follow the lead of US Treasuries. This is because the rates on bonds (especially the ten year variety) are more closely tied to the long term nature of home mortgage loan rates. But things have been a little crazy lately. In some cases, mortgage rates have been rising when tey should have been falling. And now, with the Federal Reserve trying to ensure a mortgage bond market recovery, the stock market has become tied to mortgage rates — for now at least.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.
Tags: stock market, stock market news, investing blog, Federal Reserve,
mortgage rates, investments, mortgage bond market
