Feb 222016
 

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By G. Steven Bray

The end of Feb tends to be good for interest rates, but I’m feeling a little cautious at the moment. Rates this year have been following stock and oil prices down based primarily on fears about the global economy.

However that sentiment seems to have waned in the last week or so. Stock markets have responded with sizeable gains, and oil prices have stabilized a bit. Interest rates are off their recent lows, but they’ve refused to follow stock prices higher – so far. While I don’t think rates are in a hurry to head higher, the change in sentiment has arrested our downtrend.

Interestingly, most economic data still suggests a weakening picture. However, one report last week caught my attention. Inflation at both the producer and consumer levels ticked up last month. While the increase was fractional, and one month does not make a trend, inflation is the enemy of low interest rates. Markets barely reacted to the report, but it bears watching.

That aside, if you’re floating your interest rate, any down day for rates this week may be a good opportunity to lock. I think the risks outweigh the rewards at the moment.

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