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Mortgage Rates Hold 2-Month Lows

Mortgage rates held their ground today, keeping them near the lowest levels in more than 2 months.  There were no major economic reports, but financial markets were highly active nonetheless.  In particular, it was the worst day of the year for many major equities indices, including the S&P 500.  In fact, it was the worst day of selling since late August. As we've seen on several recent occasions, the selling in stock markets proved beneficial to bond markets.  When bonds (a broad term that includes mortgage-backed-securities) improve, interest rates fall.

Stocks and bonds have an assumed relationship that doesn't always hold true.  The thesis is that investors buy bonds when they sell stocks and vice versa, thus leading interest rates to move in the same direction as stocks.  To be sure, there is never a guarantee that this correlation will hold true on any given day, but chances improve on these days where stocks are really getting hit hard.  Today was no exception, but because it began with bond markets in weaker territory (implies higher rates), the improvement seen throughout the day was only enough to get most lenders back in line with yesterday's rates.

This Daily Mortgage Rate Update is provided in partnership with Mortgage News Daily.