Over the past few weeks there has been plenty of negative news in the market place that should have helped mortgage rates improve.
First we had the Egypt uprising. That started sending oil prices up. Then Libya followed. Oil prices went over $100 a barrel. Yesterday there was news of protests going on in Saudi Arabia, the world's largest oil producing country. As a result of this, the stock market has been under pressure. From about a Dow 12,400, yesterday the Dow closed below 12,000 for the first time since the end of January.
Typically interest rates improve, that is, go lower when we have lots of negative news affecting the financial markets. The reason for that is fixed income investments like Mortgage Bonds and US Treasuries are considered a safe haven. When the world is nervous about the stock market, they buy safer investments. This drives interest rates lower.

However, what is interesting, currently despite all this negative news, interest rates have improved very little.
Why? Perhaps the biggest concern is future inflation. Inflation is an enemy to interest rates. In addition, most economists believe that the current bull market in the US stock markets is still in tact. Some major financial institutions have predicted a Dow 14,000 by the end of 2011.

Based on what we have been seeing, there is good reason to believe interest rates will gradually go higher this year. That means if you are waiting for a better rate, before you refinance your home, that may never happen. If you are saving money at current rates, I would advise you lock in your rate and don't stress over it anymore.

If you are in the market to purchase a home, how will you be affected? There is so many amazing buying opportunities right now, you should certainly proceed with your plans. Your rate may be a little higher than what it was a few months ago, but historically, these are extremely low rates, which we perhaps may never see again. Hopefully you will look back in a few years and feel that you were a genius to buy in 2011!

In my market place, which is all of Chicagoland, one of my clients bid on a $1.3 million dollar home in the suburb of Winnetka. This home was listed on the market just the day before. Well, he put in a written offer and that day the homeowner received three more offers and that house went under contract. Is the market starting to come back? Hopefully this is a sign of some nice improvements in the real estate market for 2011.

Thought of the day:
"The definition of insanity is doing the same thing over and over again and expecting different results!"
                                                                                                             Benjamin Franklin

Till next time, live your life with purpose and passion!

John Santorineos



P. S. Whether you are buying or refinancing, our licensed professionals at www.AboutHomeMortgages.com are ready to assist you with securing your next mortgage.

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