For those of you who consider me far too 'glass is half empty,' here's a little bright side to the near 1000-point drop in the Dow yesterday: Investors fled to the 10 year Treasury, driving the yield way down and pulling down the rate on the 30-year fixed mortgage right along with it.
The yield came up a bit, but at one point yesterday you could get a 30-year fixed rate mortgage for 4.5 percent with no points. How's that for housing stimulus?? So was it just a blip on the radar? Not necessarily.
"More than anything, it means mortgage rates will stay close to the 5 percent mark a bit longer than was forecast a week or so ago," says Greg McBride of Bankrate.com. He admits it's probably a temporary blip, but "mortgage spreads are widening because bond investors are nervous about anything that doesn’t carry a U.S. government guarantee." If the situation in Greece were to become a global contagion, he adds, that could keep U.S. mortgage rates down.