The 30 year fixed rate is at 6.375% before adjustments, if any.
Mortgage/Economy news:
Oil has really replaced the credit and housing markets as the main factor impacting the stock market. We’ll get to what’s affecting bonds in the Technical Analysis section. Now, it’s not oil prices directly causing panic in stocks, but rather what they represent. Investors see oil prices as a leading indicator of inflation right now. Oil, and we can lump in commodity prices, affects every industrial country in the world, which means that there could be higher global inflation. This leads to fear that not just the U.S. but all countries may start raising their lending rates. Higher rates are supposed to lead to slower economic growth, which the U.S. in particular can ill afford.
When the financial markets get “crazy,” as they currently are, there are fewer factors to consider. One might think it to be the opposite, that there must be so many things going right or wrong (depending on which way the market is going), that it has prompted these insane moves. In reality, when any markets get as volatile as they have all been (i.e. stocks, bonds, commodities, currencies), it comes from more emotional trading. When times are good, it is that “irrational exuberance” that Alan Greenspan used to always talk about. That was his way of saying that there is no logical explanation for what people are doing. In the case of the current stock and bond market declines, one person panics, and then another, and then another. Eventually, you’ve got everyone sprinting for the door.
This is not to say that people are not looking at the economic data and other information as well. But, they are certainly reacting more strongly to it. For instance, watch the markets right after 8:30 AM ET tomorrow after the retail sales data comes out. There will probably be a sudden surge in one direction or the other, depending on how the majority of people perceive the data. Economists are forecasting a pretty good increase. That would definitely be contradictory to what the markets seem to think at the moment. Assume that no matter what the numbers are, that the stock and bond markets are going be very volatile again tomorrow.
Thought of the day:
Accept responsibility for your life.
Know that it is you who will get you where you want to go,
no one else.
(Provided by Steve Hale~Georgia Platinum Mortgage)
