Understanding Mortgage Rates | dripp inc | Home Equity | Refinancing and Remortgage Guide

Good Morning,

The stock market has been rallying after the Consumer Confidence Index showed better than the expected forecast of 50.0. As a result, bonds are being sold and the money is being reinvested into the stock market again. Mortgage rates will most likely be going up today, so if you are in the process of or thinking of refinancing/purchasing a home soon, I suggest locking in to stay safe.

Here is what’s going on:

Today’s Consumer Confidence Index was higher than expected at a reading of 51.9, which I was assuming would be the case since Consumer Sentiment did the same last week. This is not good news for the bond market and I expect mortgage interest rates to creep back up again throughout the day. Even though Consumer Confidence is still very low relatively speaking, the forecast called for a 50.0 reading and the result was a 51.9 reading. The 10-year bond yield is already up by 0.570%. The Dow Jones is up by over 120 points and the Nasdaq is up over 40 points.

Simply Put: When an actual economic report is more favorable than what is forecasted, regardless of whether it is still a “negative” report, investors see that as a sign that the economy is at least improving. Consumer spending accounts for 2/3rds of our economy, so the more confident consumers feel about the economy the more likely they will spend. That is a good reason to reinvest back into stocks, which statistically and logically hurts the bond market. Since mortgage interest rates are tied to the bond market, they rise as well.

Please e-mail me at Savvas@drippinc.com with any home equity or remortgage questions or to be added to our mailing list.