No news is good news for mortgage rates
As we near the end of the first quarter for 2019, rates remain neutral. There has been very little movement since the beginning of the year in mortgage rates. Delays on the pressing issues are helping to keep rates unchanged. The anticipated trade meeting with China has now been pushed back to April. There will be no fast solution on trade, the longer it takes the more the global economy feels the impact of increased tariffs and uncertainty. Brexit was a “no vote” and today voting again to delay that decision in order to work out a better deal with the EU.
While U.S. interest rates are much higher than other nations, we made a run at increasing the near zero rates up to 2-2.5% and stocks fell 20% and weakness in the economy started to show at the end of 2018, since then the Fed has since returned to a more accommodative stance on monetary policy. The EU made a run at reducing its quantitative easing much like the US, only to pull back as well. Japan has had near zero interest rates for over 20 years. The new economy is addicted to low rates. Given US Bonds and Treasuries have a higher rate of return than any other safe haven asset, expect demand to remain with investors buying US bonds and that means mortgage rates will stay lower for longer.
Did you miss Gary Crabtree last week at the board?
I did too, but luckily I was given some information on the key points. His 2018 Market Recap for Bakersfield shows the following:
- Median price increased 4.7% up from 3.6% in 2017
- Current median home price for an existing home is 243,000/Median price for new construction is $314,000
- Sales volume increased 1.9%
- Marketing time declined 4% to 48 days and unsold inventory declined 5% to 2.1 months supply
- 92% of all homes sold are under 400,000 and 44% of those are between 200k-300k
He reports overall a stable and slightly increasing housing market given the economy and his 2019 outlook shows the median home price will continue to appreciate at 4.00-4.5% which is higher than the overall outlook for the rest of the state. Supply will continue to be an issue. He predicts slightly higher interest rates in 2019 and a possibly slowing in 2020 as the general outlook is for slower economic growth.
What to watch for this week:
- Now experiencing fatigue on the topic of Trade, expect more of the same.
- Brexit - No news is good news?
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.