Skip to content

How Low Can Rates Go?

July 11, 2016


Each week, we see interest rates as low as they’ve been in our lifetime.

This week, the yield on the 10-year U.S. Treasury note hit another all-time low, dipping below 1.37%. Mortgage rates aren’t quite at an all-time low, which occurred in December 2012, but they’re darn close.

Again, we look to the other side of the Atlantic for the cause. Financial markets rallied over the second half of last week, but they pulled back again this week. It seems market participants, after having a holiday weekend to mull things over, returned to work Tuesdaythinking there is still considerable market risk associated with the U.K. Brexit vote. Investors re-embraced haven assets – precious metals and U.S. Treasury securities. Prices in both asset classes have risen meaningfully over the past week.

We all know that refinance activity is surging, but more importantly, purchase applications are again moving higher. The Mortgage Bankers Association Purchase Index was up 4% last week after treading water over the previous three weeks.

What occurred this past week may have been one last spastic reaction to the Brexit vote. In that case, rates could start trending higher, especially when you consider no other major event hangs over our heads. It’s tough to argue against locking in at today’s rates.

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: