This has been a challenging year so far for the financial world. With stock indices down close to 20 percent and with oil dropping to its lowest level since 2003, mortgage rates have remained unexpectedly low.
The economy reported a weak 4th quarter reading for GDP (Gross Domestic Product) and the February jobs report showed that job creation was below the pace of previous months. With world economies still showing signs of weakness, the Fed, which has stated that they would like to raise rates four times this year, have begun scratching their heads.
Fed Chairwoman Janet Yellen recently said that the Fed’s future moves would be very data-dependent, and she has been true to her word. The futures market, which makes bets on what the Fed will do, shows only an 8 percent chance in March and a 36 percent chance in June that the Fed will raise rates. This changes daily depending on what economic news comes out and also any geo-political news.
Market uncertainty and the drop in oil prices have caused investors to flock to mortgage and treasury bonds, pushing rates down.
Many borrowers are beginning to look at refinancing again because we are approaching historic lows. Also, the drop in rates should make this a great spring market for anyone looking to buy a home.
One thing is certain, the Fed will have its hands full deciding what to do next.
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