With minimal economic news during our holiday week, mortgage rates have continued at the lowest they have been for decades. Last week ended with mortgage rates slightly lower while the volatility in mortgage markets and other financial markets stayed pretty high. Without major changes in the financial markets, sudden movements in rates were known to stir during the holiday week.
Stock markets also had similar price fluctuations while the DOW recovered the 400 points it lost in the prior week. The volatility in financial markets reflects uncertainty for investors regarding the growth of the economy.
Why are mortgage rates Low?
The current low mortgage rates can be identified by a couple of important factors. Knowing these factors may give you a better understanding of the housing market and why now is a great time to buy a house or refinance.
Reason 1: Inflation is under control and is expected to remain low while interest rates stay low.
Reason 2: Demand for mortgage-backed securities (MBS) is high When (MBS) are packaged and sold as government guaranteed (MBS), mortgages are viewed as “safe” investments, similar to the US Treasury security. Safety is very important to investors in these uncertain times.
While inflation stays low and the demand for Mortgage-Backed Securities is high, that is keeping current mortgage rates low. Now is a perfect time to buy a house because the rates are likely to stay low, and perhaps get lower. So, if you’re ready to buy a house or refinance, now is a perfect time.