Here we are at the end of October. Summer is over, the leaves are turning beautiful colors and the temps are getting a bit cool. We have a lot to be thankful for and the holiday season is on the way. The business and investment climate is still a bit crazy, though.
Early this month the stock market began a sharp decline and the Dow (DJIA) fell through the 10,000 mark. This caused a round of panic selling over the next 2 weeks which has left the DJIA around 8,000. Ouch! Typically, when stock prices are falling investors shift money from stock investments into safer treasury bonds. When Treasury bond rates fall mortgage rates typically follow. Nothing is following typical patterns right now though.
The Fed announced a surprise ½% rate cut on February 8th to try and settle the markets and to help the banking crisis by making it cheaper for banks to borrow money. The bad news – over the course of that same week mortgage rates actually went up ½% and were approaching 7%! Fear and negative sentiment were really the driving forces during that week. Mortgage rates started to edge down again the week of the 20th when some weaker than expected economic news began being reported. Keep in mind that interest rates typically go down when the economy is weak and rise when things are booming.
The Retail Sales figures reported a drop of 1.2% which was significantly worse than anticipated. Also reported that day was the Producer Price Index which was reasonably close to estimates with a .4% drop in PPI (the cost to produce declined excluding food and energy – this is good because the last thing we need right now is inflation!). The Consumer Price Index (also a measure of inflation) rose only .1% and was also under forecasts. Industrial Production fell a whopping 2.8% and Consumer Confidence was down. One piece of good news for all of us was that gas prices fell significantly! Yee Hah . . . filled up my tank for under fifty bucks!
Anyway, all of this news lead mortgage rates back down again through the 24th. The key right now is volatility. My advice if you are buying a home, refinancing or working with clients who are doing either, is to work with an expert who can guide you and advise you as to when and why you should lock a rate. With over 17 years of experience and a track record of truthful and honest service, I am that guy! Please keep me in mind when you need help with any type of home finance.
Written by Ken Mascia
Oxford Financial, 248.644.1200
Visit Website
Search for homes in Oakland County
{ 0 comments }





