Seattle Real Estate Mortgage Rates Today 1/28/2011
Bellevue / Seattle Real Estate Mortgage Rate Watch: Have mortgage rates stabilized? For now we have developed support as a floor and as a ceiling. What we mean by this is when Good economic data comes out we are not Spiking higher in rates, on the other side if global or local data comes out worse or Missing expectations we are not moving much Lower in Rates. For example the Gross Domestic Product report today was the strongest quarterly gain since Q1 of 2006 but it missed expectation of Wall Street. This would good news for the mortgage market but did not pressure rates to react.
What is most concerning today was an announcement from the bond rating firm Moody’s. They reported that U.S. debt may be placed on NEGATIVE outlook sooner than anticipated, possibly within 2 years. This is like a verbal warning before actually receiving a speeding ticket. If they DOWN GRADE were to actually happen Mortgage Rates would spike overnight. WHY? Consider this. If you have all of your money in a bank and suddenly the Federal Reserve came in and said they will no longer insure funds deposited at that bank, what would you do? MOVE your money, right? Well it is no different on the global market. The U.S. bond market has been a “Safe Haven” for investors locally and globally. When there is any disrupt with foreign financial systems investors trade money into the U.S. treasuries and bonds. This has been clearly seen over the last 3 years during the recession. AND consider this, if it were not for the global and local investors yields would be much higher. With yields higher RATES would also be higher. Clearly in this example if funds leave the U.S. market and yields have to move higher to attract those investors, only one thing can happen. Rates have to move up! If rates move suddenly higher like in this example the economic recovery of the U.S. would come to a screeching halt. Housing is so closely tied to the economic recovery and housing not moving would definitely cause another recession or even more severe a depression.
What really needs to come of this is our government has to put their political dividedness aside and tackle the NATIONAL DEBT and create a real plan. Otherwise down the road we not only be facing inflation in the face but also devalue of the U.S. dollar. This also comes on the heels of what the President of China said about the U.S. recently during the meeting with President Obama. China is a MAJOR holder of the U.S. debt.
THIS IS NOT IMPACTING RATES NOW. BUT SOMETHING THAT WE CANNOT TURN A BLIND EYE TO. We will continue to monitor this story and bring you any updates as we have them.
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