News
As the situation in Japan continues to become more grim and dire by the day, my thoughts and prayers go out to the Japanese people. The Fukushima power plant in Japan is leaking radiation because of damage from the earthquake and tsunami that struck the country last week, and the country is in turmoil.
Unfortunately, part of my job responsibility is to look at the horrific scenario in financial terms. Financial turmoil has ensued in the midst of the tragedy. Global equities are down sharply.
As of Tuesday, Japanese indices are down roughly 10 percent, European markets are off by about 4.5 percent and the Dow Jones Industrial average began the day nearly 300 points lower. When massive selling of global equities such as this occurs, investors search for alternative places to invest their money.
In the midst of this kind of global turmoil, the general reaction of investors is to seek “safe” investments. Regardless of many economic factors dominating the United States today, investors deem “safe” investments to be those backed by the United States, such as U.S. mortgage-backed securities. As bad as the conditions are economically, mortgage rates in the United States have been a beneficiary.
Between March 10 and March 15, there was roughly a 75 basis point rally or improvement in mortgage-backed securities. Generally speaking, mortgage rates improved or decreased by about 0.25 percent. Borrowers in the midst of a refinance or purchase transaction were presented with a nice opportunity for a lower rate.
However, caution should be taken as the turmoil has obviously led to volatility, anxiety and uncertainty within global financial markets. Such improvements in fixed-rate investments, and such deteriorations in equity markets, can often be short-lived and due to impulsive reactions from investors. News will continue to stream from Japan on a daily and hourly basis and the direction can change at the drop of a hat.
As unfortunate as the reason is for the improvement in mortgage rates, a slight opportunity presented itself within the mortgage markets. Taking advantage of the opportunity is another matter.
Loan officers need to be constantly monitoring the changes and direction of mortgage rates as influenced by countless factors not only major global travesties. Borrowers, as well, need to be ready to take advantage of such improvements. Being ready boils down to working and communicating with professionals in the industry.
William A. DesPortes of DesPortes Mortgage Group can be reached at 970-926-9393 or william@dsmortgage.org.
Unfortunately, part of my job responsibility is to look at the horrific scenario in financial terms. Financial turmoil has ensued in the midst of the tragedy. Global equities are down sharply.
As of Tuesday, Japanese indices are down roughly 10 percent, European markets are off by about 4.5 percent and the Dow Jones Industrial average began the day nearly 300 points lower. When massive selling of global equities such as this occurs, investors search for alternative places to invest their money.
In the midst of this kind of global turmoil, the general reaction of investors is to seek “safe” investments. Regardless of many economic factors dominating the United States today, investors deem “safe” investments to be those backed by the United States, such as U.S. mortgage-backed securities. As bad as the conditions are economically, mortgage rates in the United States have been a beneficiary.
Between March 10 and March 15, there was roughly a 75 basis point rally or improvement in mortgage-backed securities. Generally speaking, mortgage rates improved or decreased by about 0.25 percent. Borrowers in the midst of a refinance or purchase transaction were presented with a nice opportunity for a lower rate.
However, caution should be taken as the turmoil has obviously led to volatility, anxiety and uncertainty within global financial markets. Such improvements in fixed-rate investments, and such deteriorations in equity markets, can often be short-lived and due to impulsive reactions from investors. News will continue to stream from Japan on a daily and hourly basis and the direction can change at the drop of a hat.
As unfortunate as the reason is for the improvement in mortgage rates, a slight opportunity presented itself within the mortgage markets. Taking advantage of the opportunity is another matter.
Loan officers need to be constantly monitoring the changes and direction of mortgage rates as influenced by countless factors not only major global travesties. Borrowers, as well, need to be ready to take advantage of such improvements. Being ready boils down to working and communicating with professionals in the industry.
William A. DesPortes of DesPortes Mortgage Group can be reached at 970-926-9393 or william@dsmortgage.org.
