This week brought bleak news to those with their eyes on Wall Street, which took a serious plunge as investors participated in a significant worldwide sell-off. The Dow dropped 530 points to end the week with a thousand-point loss at 16,459 to become the worst stock market week in over 4 years.
Chatter about the Chinese economy negatively affecting the Dow average dominated the market-watch community, as companies like Apple, which depend significantly on China, saw substantial drops in market value. The downtick began last week when China made an announcement devaluing their currency, the yuan.
The result was a massive shift from the stock market to the purchase of bonds.
This “flight to safety” of the bond market became the safe haven for institutional funds and big investors fleeing the stock market, pushing the price of the 10 year bonds higher and therefore the yield (interest rate) lower.
This is great news for those who keep watch over mortgage rates.
The movement of Long island mortgage rates is controlled by several key factors. The biggest contributor is the 10-year T-Bill (treasury bill). So these stock market troubles are, temporarily at least (and possibly longer), keeping mortgage interest rates among the lowest ever. Home prices dropped from the heyday of the housing bubble around 2008 and have since returned to stable and growing valuations. Add in our continuing low rate environment and the result is the best mortgage affordability in years.
It is a great time to buy a home. It’s not only a great place to raise your family, but also an important building block in a long term plan of family savings, investments and real estate. For those who already own a home, this news might propel you to look into refinancing your current mortgage to more affordable interest rates. If you have considered buying an investment property, now might be the right time to act.
Work with your Realtor to find a home you love and contact a Contour Mortgage loan officer to discuss your financing options today.
