Impact of the downgrade

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While the true impact probably can’t be calculated or even recognized for years to come, we can at least review the events of the past two weeks. Have these events lived up to some of the potential results mentioned in a recent post?

Yes, some of them do. In fact, the events and news coming out of the financial markets over the past two weeks fall in one of two categories:

  • Renewed fears of a double dip: It started the first business day after the downgrade when investors decided to “sell first and ask questions later.” Since then, Asian, European, and US markets have seen their stock values plummet as the world markets fear the impact of a potential second global recession. The losses were stemmed by some upbeat job news (for a change) in the US, but entering this week, the markets are still volatile.
  • Interest rates are back down to historic lows: When stocks drop as they have, the typical response is for rates to also drop. Why? As money comes out of stocks, it moves into bonds and increases their value. As mortgage backed security bonds increase in value, interest rates decrease. That trend continued over the past couple of weeks, and interest rates for a 30 year fixed conventional mortgage are back to levels we saw in the fall of 2010-in the upper 3’s.

It has been quite a ride so far, and the ride isn’t over. Is this a taste of things to come OR just the initial knee jerk reaction? Honestly, who knows. The markets are so nervous and volatile, nothing would probably surprise me at this point.

With these events taking place in the US and global markets, how does it impact those looking to buy a home or refinance a mortgage. Easy answer… at least take time to explore the opportunity.

  • If you are thinking about refinancing mortgage, I need only 5 minutes of your time to run numbers based on the info you know off of the top of your head. In 5 minutes, you’ll know if a refinance is worth exploring.
  • Looking to buy a home? With interest rates at historic lows combined with home values at their lowest points in decades, there has not been a better time to buy a home. In as little as 10 minutes, we can go through the prequalification process so you can have an idea of how much home you can and should buy.

Either way, what are you waiting on? If the property is in Georgia, I will be glad to walk with you through the mortgage process. All you need to do is contact me to get started!

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One Response to “Impact of the downgrade”

  1. Allison Spilatro Says:

    Awesome blog, excellent reading!!

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