Typically, interest rates fall in the U.S. when the economy is weak. This time is different, though. Our economy is doing pretty well. Employers are hiring and the housing market is chugging along. What’s driving rates down is investor anxiety about economic growth — or the lack of it — in the rest of the world, including China, Japan and Europe.
Look at the yield on the 10-year Treasury bond, which has been falling rapidly as worried investors pour money into the safety of U.S. government debt. Today, the benchmark note hit its lowest since late February.
Mortgage rates tend to move in the same direction as Treasuries, so borrowing costs for homebuyers might fall even more in coming weeks. That’s a boon for sellers, too.
“Mortgage rates this week registered the delayed impact of last week’s sharp drop in Treasury yields,” Freddie Mac chief economist Sean Becketti said. “Low mortgage rates and a positive employment outlook should support a strong housing market in the second quarter of 2016.”
Yesterday, Federal Reserve policymakers indicated that they, too, are worried about the unsteady global economy and signaled that they’re in no hurry to raise their own benchmark rate. Odds are good they won’t vote for a rate hike when they meet later this month.
