Elections are a great driver of uncertainty, and uncertainty causes market volatility. Because the election results didn’t swing the way markets expected, we got off to kind of a rocky start Wednesday morning. What does all of this mean if you’re in the market for a mortgage, and why does it make sense to lock your rate now?
What’s Going on in the Market and Why?
The stock market expected Hillary Clinton to win. There’s no other way to put it. They did all their trading leading up to the election on that assumption.
When Donald Trump won, it sent the markets into a state of shock. Trump may be a wild card in the minds of most Wall Street investors; they don’t really have a clear idea of what he plans to do with the economy. Because of this, stocks are volatile right now. The rally has them moving up, but there’s still some uncertainty. Normally, when there’s chaos in the stock market, the average investor runs to the safety of bonds because they’re a fixed-rate and often government-backed asset. We see citizens from all over the world flood our bond market when there’s trouble in their home countries.
Unfortunately, contrary to what normally happens with a stock market-shaking event, people also seem to be selling off their bonds. When people are suddenly unsure of U.S. economic and monetary policy, the safety of the bond market is thrown into question, and this can have an effect on interest rates
What Does It Mean for You?
Higher bond yields mean we may see higher mortgage rates. It’s a good idea to lock your rate now in case rates rise. We don’t know what’s going to happen in the market, but if you’re planning on refinancing soon and you lock your rate now, you’ll be protected from higher rates. At the moment, rates are still at or near historic lows.
What if rates go back down? If that happens and there’s a future opportunity for you to refinance with a lower rate, we’ll let you know and save you money.
Things are moving quickly, but now’s the opportunity to take action and protect yourself from some of the market chaos that’s occurring right now. Rates are a little higher this morning, but if you lock your rate today, you’ll be protected.
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.