Real Estate Market

Mortgage rates eye of Wall Street storm after S&P downgrade

Contrary to expectations, mortgage rates moved down Monday, Aug. 8, the first business day after Standard & Poors downgraded the United' States credit rating from AAA to AA-plus.

Most experts expected rates to rise, but unexpected investor confidence in U.S. Treasury bonds, following the downgrade, had the opposite effect.

Whether mortgage rates will continue to fall due to the downgrade is anyone's guess. Between Wall Street and Washington, D.C. few seem to have the right answers for the nation's ailing economy.

Erate.com reported the average annual percentage rate (APR) on conforming, 30-year, fixed-rate mortgages (FRMs) was 4.61 in its Aug. 2 report. By midday Aug. 8, the rate was down to 4.49 percent.

The rate drop came after Standard & Poors went through with its warned downgrade of U.S. S&P said it downgraded the nation's credit rating specifically because legislators' political infighting and failure to add revenue enhancing taxes to the federal budget agreement, among other reasons, reduced the rater's confidence in Washington's ability to get the budget deficit under control.

The downgrade created a sell-off on Wall Street as the DOW Jones Industrial Average plunged 5.6 percent, falling some 630 points, to about 10,800, the lowest its been since the fall of 2008 and virtually matching the sixth largest one-day decline in DOW history.

The larger Wilshire 5000 lost $1 trillion on paper, falling 891 points, its third largest decline ever.

But while investors leaped from the closing windows of opportunity on Wall Street, others flocked to the bond market, pushing prices up and yields down. Mortgage rates are tied to bond yields and often move in lockstep with them.

On Aug. 8, the price of the 30-year U.S. Treasury bond jumped more than 3 points, while the benchmark 10-year note's price rose nearly 2 full points, and the 7-year note was up by more than a point.

The 30-year bond on Monday was yielding 3.69 percent, down from a Friday close at 3.85 percent, as the 10-year Treasury yield dropped from 2.57 percent to 2.36 percent, taking mortgage rates along for the ride.

The flight to the very Treasury bonds S&P downgraded, was nevertheless a flight to quality.

Government bonds typically represent the rate at which investing in them is considered risk-free, and, at $9.3 trillion, Treasury bonds is one of the deepest investment markets offering easy to buy and sell investments.

Refinance at Today's Low Rates!

 

Follow the link to continue reading the related articles

Popular Mortgage Refinancing Options at Record Low Rates, Says Informa Research Services

Housing counseling generates optimism during tough times

Big break for California short sellers

Still difficult to qualify for best home loan rates

Housing to take center stage in 2012 election

Jobs-housing connection a key indicator to watch


 

 

 

 

 

Fannie Mae & Jumbo Mortgage Rates

Just One Click! = Current Rate Chart

Pennsylvania Mortgage Rates Current Mortgage Rates - Hawaii Current Mortgage Rates - Alaska West Virginia Mortgage Rates Virginia Mortgage Rates District of Columbia Mortgage Rates Maryland Mortgage Rates Delaware Mortgage Rates New Jersey Mortgage Rates Connecticut Mortgage Rates Rhode Island Mortgage Rates Massachusetts Mortgage Rates New Hampshire Mortgage Rates Vermont Mortgage Rates New Hampshire Mortgage Rates Maine Current Mortgage Rates Vermont Mortgage Rates Current Mortgage Rates - New York Current Mortgage Rates - Michigan Current Interest Rates - Wisconsin Current Mortgage Rates - MINNESOTA Ohio Mortgage Rates Current Mortgage Rates - Kentucky Current Mortgage Rates - Indiana Illinois - Current Mortgage Rates Current Mortgage Rates - Iowa Missouri Mortgage Rates Current Mortgage Rates - North Carolina South Carolina Mortgage Rates Current Mortgage Rates - Florida Current Mortgage Rates - Georgia Current Mortgage Rates - Tennessee Current Mortgage Rates - Alabama Current Mortgage Rates - Mississippi Current Mortgage Rates - Louisiana Current Mortgage Rates - Arkansas Current Mortgage Rates - Oklahoma Current Mortgage Rates - TEXAS Current Mortgage Rates - New Mexico Current Mortgage Rates - Arizona Current Mortgage Rates - Kansas Current Mortgage Rates - Nebraska Current Mortgage Rates - Colorado Current Mortgage Rates - Wyoming South Dakota Mortgage Rates Current Mortgage Rates - North Dakota Current Rates - Montana Idaho Current Rates Washington Mortgage Rates Current Mortgage Rates - Oregon Current Mortgage Rates - Utah Current Mortgage Rates - Nevada Current Mortgage Rates - California

Start by selecting your state





Get the Updated and Improved Mortgage Rates App from ERATE.com

iPad for Mortgage Rates

Real Estate Market News

Refinancing: Selecting a Loan

Moving Ahead With Your Refinance