A Tug of War in the Economy of Home Loans

Posted by Perfect House Team on Monday, December 17, 2018 at 3:58 AM By Perfect House Team / December 17, 2018 Comment

"It's a tug of war, we expected more"... Tug of War, Paul McCartney

Home loan rates bounced around this week, due to volatility in the U.S. Bond market, but went into the weekend still near three-month lows.

There are push/pull items that continue to limit how low and high rates can go. Here is what home shoppers should know:

Factors currently limiting how low rates can go:

Tight U.S. labor market.
Rising wages, fastest pace in a decade.
Soaring business and consumer confidence.
Solid economic growth.
Tough technical barriers.

Factors currently limiting how high rates can go:

Slowing economic conditions around the globe.
Low global bond yields – German 10-year Bund yield is 0.28% and the U.S. 10-year Note yield is 2.90%. If yields stay low in other parts of globe, there is a limit as to how high long-term rates can go.
Disinflation or slowdown in the rate of inflation around globe, including the U.S.
A split Congress that likely ensures no real fiscal stimulus in the near future.
Pace of Fed rates hikes are slowing due to all of the above.

Bottom line, we are in a very unique economy where we have strong growth, a tight labor market, low inflation and low rates...all making a great backdrop to buy a home.

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As always, thank you to Patrick Steele for sending us this great bit of info. We hope ya'll enjoyed it as much as we did!

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