Global Market Concerns Send Mortgage Rates Lower

By Kyle Chezum Updated on 3/17/2011

There’s a lot to be alarmed about in the news today.  Uprisings in the Middle East, skyrocketing oil costs, devastation in Japan, and a possible nuclear catastrophe have made some investors skittish.  Concern over the health of global markets has driven investors into Treasury Bonds, and this, in turn, has sent mortgage rates lower yet again.

Freddie Mac reported an average mortgage rate of 4.76% on 30 year fixed loans and rates as low as 3.97% on 15 year fixed loans.  Just last week 30 year fixed rates rested near the 4.9% mark, making this a significant and sudden decrease.

Refinancing activity is likely to pick up as a result.  Rates for the 15 year fixed loan, one of the most common refinance loans, are lower than they’ve been since December.  There is a very strong chance the Mortgage Bankers Association will report a surge in refinance activity through the end of the month if rates remain this low.

Some economists, though, expect the dip in rates to be short lived.  Treasury yields have already begun to return to normal levels, they claim, upon evidence that inflation is rising in the US.  Rising inflation tends to push investors toward more valuable investments and away from slow, safe investments like government bonds.  If these economists are correct, the decrease in mortgage rates may be a brief blip in an otherwise upward trend.