Forgotten Your Password?

Need to Register?



Thursday, November 15, 2012 - Article by: cdiab - Bridgeview Bank Mortgage Co. - Message

My clients recently have asked me often where I think interest rates are headed after the election. Are the record lows going to be just that? Or are we going down further? The behavior of the interest rate market in reaction to news can be a telling sign of where rates are going. Good economic news should send the stock market rising, and with that, interest rates.

Bad news should drop the stock market and interest rates. Last Thursday, the unemployment report came out strong, but the movement of rates suggests that we have some room to move down through and after the elections. Rates opened strongly up on the good employment news. Then, throughout the day, they fell back to their previous day's levels. This weakness in the face of good news hints that rates will go down in the short run. The long run will depend upon the economic actions taken by whatever administration wins this election. Will President Obama or Mitt Romney have a plan to boost home demand and home prices, thus raising rates? So far, both seem clueless on how to do so.

President Obama's main pillar of economic stimulus has been allowing the fed to buy bonds to keep rates low. That helps housing with a short term bounce, but does not create jobs that will help housing in the long run. Governor Romney has so far offered nothing more than tax cuts as job stimulus--something that from the 1980s to the present has concurred with a shrinking base of high paying jobs. Interest rates should stay low for the near future.

Related Searches:

Didn't find the answer you wanted? Ask one of your own.

Get an answer
Subscribe to our news feed.