It’s a Small World After All

These days, that sentiment is more than just a Disney song, as events in Europe continue to impact our markets. If you’ve been wondering what’s been going…and what things mean for home loan rates, here’s the scoop.

First, it’s important to remember that when our economy is struggling, our Bond Market usually benefits as investors seek a safe haven for their money. And since home loan rates are tied to Mortgage Bonds, our home loan rates are sometimes at their best when our economy is struggling. In a way it makes sense…in times of economic struggle, good home loan rates can help kick start our economy in other areas.

What’s more, our Bond Market–and therefore home loan rates–also often benefit when the global economy is struggling, as investors overseas see our Bond Market as an ultra safe haven for their money. This has happened throughout recent months as Greece and several other countries in Europe have been facing a debt crisis, with Greece approaching default. However, in late October an agreement was finally reached for addressing the Greek debt crisis and this story continues to develop.

So what does this mean for Bonds and home loan rates?

If the news out of Europe remains positive, Bonds and home loan rates here in the United States could face additional pressure. However, if there is pessimistic or uncertain news, investors may return to the safe haven of Bonds, meaning home loan rates could benefit.   The most important thing to remember is that now is still a great time to purchase or refinance a home, as home loan rates remain near historic lows.