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Chrisman's Corner: Look at These Rates!

JMAC’s brokers are being asked by their clients, “Can mortgage rates move any lower?” The answer to that is, “Maybe.” No one has a crystal ball. Mortgage rates in the United States are currently near their all-time lows seen in 2012. There are certainly economists and investors arguing that rates will move higher, and rates will move lower – that’s what makes a market!

Our experienced brokers know that rates may go lower because the U.S. economy is still not growing with any strength. We have another set of data this Friday, but the latest employment reports show a slowing in job growth which could be predecessor to a contraction in employment. Corporate profits, as a proxy for economic health, are not growing.

And our rates are impacted by what happens overseas. Look at Brexit! So some say that our rates may go lower because of the global economy and markets, for instance the German Bund, their ten-year bond, has reached zero percent interest, and Japan's central bank has had negative interests rates for several months.

But JMAC and our brokers also know that there are signs of improvement in the U.S., and those generally, eventually, lead to higher rates. Some portions of the economy, like housing, are doing well and may pull the rest of the economy's growth upward. And if the economy does begin to increase growth, many anticipate then employment will grow.

The Federal Reserve’s Open Market Committee met a few weeks ago, and voted to do nothing to short term rates. That was expected. The expectation, however, is that at some point this year it will raise short term rates. Mortgage rates, however, move independently of the Fed, and in fact rates are lower now than when the Fed raised its rate in December.

Refi-mania – but brokers need to be careful of early pay-offs! Ask your JMAC AE for specifics.