It's been about a DECADE (you read that right) since the yield curve has been this steep. And it's showing up in a sudden jump in mortgage rates. This picture certainly tells a thousand words.
The brokers around town will tell you that this is due to "mega-inflation." Well, a bit of it can be attributed to fears of possible inflation but it has to do with the flood of money that's trying to slow the economic fall, namely real estate (residential and commercial).
One will have to give way and as I've stated before, it will (still) be property prices. Rates will go even lower over the coming year, so the (useless marketing gimmick) "affordability" index will continue to improve.
Don't confuse a bearish sign with the senseless optimism. At least not for another year or so!
2 comments:
Your investable funds will be better off in bank stocks than Hoboken real estate! Win-win as stocks are flooded with money and home prices fall in parallel.
Mortgage rates on 30-year conforming loans jumped nearly 20 basis points Friday morning to an average of 5.27%, according to bankrate.com. This compares with 5.08% on Thursday, and 4.78% last week.
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