Rates have dropped precipitously in recent days b/c of the global sell-off in stocks. Once again, weak economies worldwide are spooking investors and causing them to sell stocks and move to bonds en masse. When investors move to bonds, the price of bonds increases b/c of increased demand, and this pushes yields and rates down.
For some reason, there is sort of “a floor” at 3.75%, and we can almost lock that rate at “no points.” We expect the above quoted rate to fall to 3.625% once the floor collapses.
What makes this all so interesting is that the Fed was supposed to raise rates in September b/c the economy was improving so much. Now, it seems very unlikely that the Fed will raise rates.
This is what is going on: nobody knows what is going on. Also, the Fed seems to be wrong with its prognostications frighteningly often.
According to Holman Jenkins in the WSJ, governments worldwide (Japan, China, Europe, US) are not even close to taking their debt and spending problems seriously. They instead continue to prop up their economies and debt problems with more and more borrowing. This in turn is creating extremely unusual economic situations and unprecedented volatility. His main point: expect the unexpected, and be ready.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646
