Good morning! It’s Tom Heath with the Heath Team at Nova Home Loans. Today is October 26th and this is our final installment for the month of October regarding Mortgage and Real Estate Matters.
There’s an election coming up next week and I’m getting a lot of questions about how that will impact interest rates. As I’ve said many times, I have no idea. Normal market forces would tell us that the winner of this election could have an impact on interest rates, but we’re not in a normal market.
The Federal Reserve is buying so much of those Mortgage-Backed Securities, which is the instrument that really controls the mortgage interest rates, and because of that I think they’re going to adjust their purchases to offset any positive or negative reactions in the market.
Things we are watching a little bit more closely that have a lot to do with intra-day changes and pricing is the containment of the covid outbreak, especially this recent surge, and the talk of stimulus. Stimulus would put money into people’s pockets that would help with the unemployment issue and ironically that would make interest rates probably move up a little bit. So the lack of stimulus results have improved our interest rates.
Now the flip side of that is with Corona spiking again, there’s concerns of higher unemployment, more rigorous efforts to control the outbreak, which could lead to more economic damage, and that is concerning those in the investment market. So they’re looking at longer term, low-yield solutions such as bonds and mortgage-backed securities.
So there’s a lot of uncertainty, I don’t think any one thing is going to move the markets tremendously, but I think the combination of factors of something that we’re watching on a regular basis to help our clients make good decisions from day-to-day. Long-term forecasting, I think, is really just a guess at this point, but short-term forecasting, whether to lock today or tomorrow, those types of things, we have enough data to really help people make informed decisions.
There’s some good information about rate locks, what moves rates, and how the mortgage Market works on our website TheHeathTeam.com. You can always reach out to us with questions, comments and feel free to let us know if there’s a topic you would like us to cover on one of these weekly updates. Have a fantastic week and we’ll talk to you next Monday in November!