A Stark Reminder
Actually, we have had a few stark reminders recently. The most recent was the escalation of our engagement in Syria and another, a show of force near the Korean peninsula. Since the election, much of America’s attention has been focused upon domestic issues such as the health care bill, a nomination to the Supreme Court, budgets and more. But now we are reminded that the world is connected. Connected not only in our fight against terrorism, but also the economics. From Brexit, to a devastating tsunami on the other side of the world, we have been constantly reminded as to how events in one part of the world can affect our part of the world — both good and bad.
Some of these reminders reside on our domestic side as well. Not long after the first attempt at “re-reforming health care reform,” we now face a late April showdown which could result in a shutdown of the Federal government. While we are not predicting that this necessarily will happen, it is a reminder of the way Washington works — contentiously and slowly. This is especially true when major changes are proposed.
How does this affect us? We have talked about the surge of confidence that America has experienced in the past several months. It would be natural for this confidence to wane somewhat, as the processes move forward slowly. While this may slow down economic growth a tad, it also gives us the benefit of slowing down the rise in interest rates that market analysts have been predicting. Lower rates would help boost the economy and hopefully offset the cooling off of enthusiasm. While we can’t predict the path of rates or the economy, it does not hurt to gain some perspective as to the possibilities, especially when we get hit with news of world and domestic events.
The Weekly Market Update
Rates fell slightly to their lowest levels of the year last week. For the week ending April 13, Freddie Mac announced that 30-year fixed rates fell to 4.08% from 4.10% the week before. The average for 15-year loans decreased to 3.34%, and the average for five-year adjustables moved down slightly to 3.18%. A year ago, 30-year fixed rates averaged 3.58%.
Attributed to Sean Becketti, chief economist, Freddie Mac -- "Following a weak March jobs report, the 10-year Treasury yield dropped about 5 basis points. The rate on 30-year fixed loans fell 2 basis points to 4.08 percent. Not only did the average decline for the fourth consecutive week in our survey, it also fell to a new 2017 low."
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.