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By G. Steven Bray
Mortgage rates have been on a tear lately, rising from near record lows to the highest rates of the year in a few, short weeks. But it seems the train has run out of coal for now. Rates have plateaued. The question is will we regain the ground we lost?
There is hope. Recent US economic data has been disappointing, and some analysts are tossing around the dreaded “R” work – recession. Overseas economies don’t look much stronger, and the European Union still is struggling with the Greek question.
With all that acting as a wet blanket, you wouldn’t think we’d be worried about higher rates.
The problem is the German Bund. Investors drove German rates close to zero earlier in the year. A few weeks ago, investors started selling, and German rates rose rapidly, dragging US rates along for the ride.
For now, let’s take solace in the fact that rates have paused, but it’s entirely possible that the lemmings will start running towards the cliff again. If you choose to hope for lower rates, float cautiously and remain vigilant. Mortgage rates are likely to remain volatile, but floating could be a successful strategy if you watch for a dip like last Fri.
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