Mortgage rates Sink to Record Low's

Against all odds, mortgage rates have continued to fall. We are now at the lowest interest rate levels in history. Don't believe me? Read this article; http://www.msnbc.msn.com/id/37896585/ns/business-real_estate/.

If you have been sitting on the fence wondering about refinancing or purchasing a home, it is time to get off of that fence.

How long will rates stay this low? Great question, and a hard one to answer. All of the "experts" and "analysts" never thought we would be this low in the first place. SO it is important to understand why the rates have fallen to the current levels.

From our friends at Mortgage News Daily:

We can look at price action in one of two ways today...

1.A Product of Excess Uncertainty: continued choppy behavior (stocks, bonds, mortgage backed securities)within a well-defined but wide range OR

2.Double Dipper: We are experiencing the beginnings shift in global economic sentiment...sparked by a downturn in housing, weak June employment numbers, and earnings disappointments.

If you are a supporter of the range bound perspective (#1), you might view today's interest rate rally as a "buy the rumor, sell the news" pre-FOMC flight to safety. This would assume you felt Treasuries were overbought and unlikely to break long term 3.17% resistance. You might also feel that stocks were "selling the rumor" so they could "buy the news" tomorrow. The rumor being a significant FOMC downgrade of housing or the labor market. Supporting this theory: stocks are still trading in low volume and the 10yr note didn't breakout of the recent range

If you're a "DOUBLE DIPPER" (#2), today's worse than expected Existing Home Sales print was another nail in the coffin of the global economy. You've probably been patiently waiting for the short covering led stock market glass rally to shatter. This camp speculates that the Fed will downgrade the housing market tomorrow by referencing "SHADOW INVENTORY" in the FOMC statement.

While option #2 seems like the most logical outcome, especially to frustrated housing professionals (even I am frustrated), I find it hard to believe the Federal Reserve will "cut off their nose to spite their face" and spook the markets with some bearish verbiage. More or less, given the government's recent rhetoric on housing and the NAR's "glass half full" spin on data, the Fed will probably sidestep the issue while finding a way to remind us all that the road to recovery is going to be LOOONG and ROCKY.

If this LONG and ROCKY sentiment holds tru, we may see rates at these low levels (sub 5%) for quite some time.

Adam