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 Bond 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 Utah home.
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