Both the stock and credit markets ended on a positive note over the Thanksgiving holidays. Stocks hit another record on the Dow but instead of mortgage rates rising they actually fell. According to Freddie Mac’s weekly mortgage survey, the 30 year fixed rate for conforming loans dropped yet another two basis points to 3.97%, matching the rate on October 16. Just one year ago, the same 30 year rate was at 4.44%. The 15 year rate held steady at 3.17%.
Instead of reacting to stocks here in the U.S., investors around the globe are putting money into U.S. Treasuries and mortgage bonds, driving rates lower. Japan is back in the news officially falling into a recession with two consecutive quarters of negative growth as the federal government here in the U.S. revised Q3 GDP up to 3.9 percent.
China has also recently lowered borrowing costs in an effort to get their economy back on track at the same time European economies are looking for some positive news. There are those who are talking about a stock bubble at the Dow but if that indeed does come true it will only bode well for mortgage rates.
The absence of two Fed hawks next year might be felt and their replacements won’t be known until the search firm hired to find those new board governors announces the candidates. Until then, the likelihood of the Fed doing anything regarding rate moves is highly unlikely and many are looking for rates to continue on a sub-4.00% ride well into spring.
As we enter the final month of the year and quarter, several reports will be release including Construction Spending, the Fed Beige Book release as well as the all-important Nonfarm Payroll numbers and Unemployment Rate for November this Friday. The rates is expected to hold steady with approximately 225,000 new jobs created.