Homebuilder stocks jump on Fed rate cut amid coronavirus outbreak

Mortgage rates do not follow the Fed Funds rate, but instead loosely follow the yield on the 10-year Treasury. Still, the drop by the central bank is a result of high volatility in the markets on concern that the deadly coronavirus outbreak will impact the economy. That will keep investors in the bond market driving yields lower.

The average rate on the 30-year fixed mortgage, for borrowers with solid credit and a good down payment, hit 3.13% on Monday, matching its record low, according to Mortgage News Daily. Mortgage refinances are surging on the news, but it is not quite as clear a path for potential homebuyers. "If Treasury rates decline further, it is likely that mortgage rates will follow, giving more homeowners the incentive to refinance," wrote Joel Kan, an economist with the Mortgage Bankers Association. "For prospective buyers, low rates boost purchasing power, although some may also pause their home search given the uncertainty."

And there is also the possibility that the rate cut could turn rates slightly, although not dramatically, higher. "10 year Treasuries have benefited from panic, uncertainty, and economic concerns," wrote Matthew Graham, chief operating officer at Mortgage News Daily. "If a Fed rate cut helps ease those things, it's bad for longer-term rates."

It’s called a “FED Cat Bounce”

who do you think you are fooling with this stuff cnbc? boomers do not use twitter

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Stocks Snap Back After Fed MoveThe Dow Jones Industrial Average fell or 0.2% after staging its biggest one-day rally in nearly a decade Monday. The S&P 500 lost 0.4% and the Nasdaq Composite fell 0.2% So many damn bots in our markets Yup, because the world knows Trump isn't up to the task of stopping a pandemic. Pouring more and more money by the fed into the markets will end the same way it did under Reagan and GW. Time to think about investing while the market is still bouncing up and down. Buy it on a down day knowing that it will eventually go up.
Источник: WSJ - 🏆 98. / 63 Прочитайте больше »