How will the fiscal cliff negotiations affect mortgage rates?

Good Afternoon.If a favorable deal is reached to avert the fiscal cliff, the stock market will rally and this will have a negative affect on mortgage rates. If a deal is not reached, or if the deal that is reached is not favorable, then mortgage rates will drop as more investors will continue to move their money into mortgage backed securities and bonds. The stock market, at that point, will fall.Most in the industry recommend that you have an application on file and when word of a fiscal cliff agreement is reached, be ready to lock. I hope this provides some clarification.Corey MoserAspen Hills Mortgage, LLC801-963-2300www.aspenhillsmortgage.net.

In general there is an inverse correlation between the stock market and the bond market. Meaning, stock market up, rates up. Stock market down, rates down. Lately, the decision by the feds to buy mortgage backed securities (known as QE1 and QE2), the stock market has gone up and rates trended lower. If in agreement is not reached, the world will not stop. The stock market will probably stutter, but corporate profits are at all time highs, and that generally supports the stock market remaining strong. The Feds are not likely to allow rates to rise too much and will take additional steps to keep them as low as practical to help keep the housing market recovering. If you are trying to time the market, don't. You will most likely miss an opportunity. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ Licensed in California and Arizona ~ NMLS 40586 ~ www.LoansA2z.com ~ 888-889-9950

HRunner,According to most experts, it's fairly likely that the deal that is struck will most likely a "kick the can down the road" sort of solution. Whether it is a temporary or long term fix it will most likely raise interest rates for the short term, and then they should settle a bit. I think the fiscal cliff is garnering current attention, but there is a great deal of additional problems we face domestically and internationally that are still causing a flight to quality, ie the purchase of mortgage backed securities (lower rates), additionally the Federal Reserve is still buying up an enormous amount of mortgage backed securities (lower rates). There will be fluctuations but no major sustained moves for a while with regard to interest rates. Having said that it is still a good idea to seek advice on timing the markets as well as you can. - can save you some cash ;-)Jason

When good things happen mortgage rates go up, when bad things happen mortgage rates go down. If Mortgage rates go up there will be a reduction in home value as a result of pre-approvals diminishing in value. If rates stay low, we should continue to see the market correct and ultimately stabilize. The market is hot right now, but any intervention could result in catastrophe. I for one hope that for the time being things stabilize slowly all around allowing for everyone to hunker down and dig in for the long haul out of the debt mess.

The answer given by Cmoser is dead-on and the answer by Seatlle pretty much tells the story on rates in the last couple years. unfortuneately people are Cavalier in their thoughts that rates are always going to stay this low forever but that is simply not the case. If you are thinking about dong something with a mortgage there is no better time than the present and my office is only in Union Park and I meet me clients at their house. You can always call me on my phone at 801-971-6901 or go to my website at www.carlo.bluerooof360.com and I hope to talk to you soon.

The simple uncomplicated answer is this... Don't expect rates to change significantly higher or lower anything soon.