Mortgage Rates Higher, WHY?
If the economy is so bad, why did mortgage rates get higher this week?
We all know that a weak economy typically means lower mortgage rates, but it is not a direct relationship. Mortgage rates are based on mortgage bonds and any financial instrument trades on both data AND fear. If you were investing money into a bond that is backed by real estate and that real estate might lose value, you probably aren’t going to pay a premium for that bond.
People are nervous right now, and the future has not been this unclear for quite some time. The last time the economy was this rough was the 80’s and the chart below shows US GDP growth over the past 60 years.
You can easily see that over the past 20 years things were a lot more stable and that created a great climate for investment. Investing is basically gambling on what the future holds with the money you have today. Investors now are finding it hard to predict future values because of the current instability.
Until the market stabilizes and investors have a more clear understanding of what the future holds, mortgage rates will remain volatile.
If you would like a quote for your specific situation please call Olan Carder today at 980-721-7478 or visit his website at www.charlottemortgageonline.com.
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