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New Market Order: Interest Rates Rise on Federal Reserve Commentary

Orange County, CA – The Federal Reserve Open Market Committee met yesterday and gave a positive nod to the economy. The economic data and subtle yet substantive hints about an economy that’s “expanded moderately” spurred the stock market yesterday to its best single day of growth this year.

The stock market and bond market tend to work as opposing forces. What’s good for stocks is most often bad for bonds and vice versa. And interest rates are determined from the yield on mortgage backed bonds. Therefore, the positive economic news led to a sudden spike in interest rates this morning . Yesterday’s quotes are no longer valid.

Mortgage rates have been very low for a long time. They can’t fall forever. There is definitely more room for rates to rise than to fall. However, the opposite is true as well. In many cases, I’ve witnessed these sudden spikes followed by gradual or sudden declines. It’s a volatile world economy right now.

My advice is the old Boy Scout Motto: Be Prepared! I could spend all day making a case for higher or lower interest rates. The point is, I’m not in control of the market. The market will do what it needs to do adjusting for risk and perceived value. What we need to realize is that a negative trend is developing right now.

If you’re looking to purchase, be prepared and lock your rate. Keep an eye on the market and understand how rate increases can affect your payment or impact the loan amount that you’re approved for.

If you’re considering refinancing, get your information in to us so we are prepared to lock and go when we see a rally. We want to take advantage of ANY rally that the market gives us.

The bus is leaving the station. So, if you’re on the fence it’s time to decide which direction you want to go. And if you have a question please feel free to contact me!

Scott Storace

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