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Mortgage Trends with Brian Cavanaugh

Are mortgage rates going up? Are mortgage rates going down? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week’s survey may point you in the right direction. The Bankrate.com survey is for conforming mortgages only. It is not specific to Cincinnati, nor does not apply to FHA mortgages, VA mortgages, jumbo mortgages, or super jumbo mortgages. For a personal rate offer, contact me directly. Here’s the group’s 30-day prediction for mortgage rates: • 18% predict mortgage rates will increase • 18% predict mortgage rates will decrease • 64% predict mortgage rates will remain unchanged I am bucking the trend, predicting that mortgage rates will decrease over the next 30 days. My advice not be appropriate for your individual situation and I’m not always accurate besides. Either way, here’s what I told Bankrate.com: “Demand for dollars-denominated bonds helps rates to ease lower.” Now, there are a lot of reasons why mortgage rates change. Economics, politics, trends — take your pick. Each plays an important role. But of equal importance is the value of the U.S. dollar. The U.S. dollar matters to mortgage rates because it’s the currency in which mortgage bond investors are repaid. When the dollar loses value, so does the value of those repayments. Therefore, mortgage-backed securities lose their luster and rates rise in order to entice investors back. When the dollar gains, the chain reaction flips in reverse. And, as a result, mortgage rates fall. The dollar should gain in the coming weeks. The U.S. economy appears to be recovering from recession — probably faster than our global peers. As a result, whenever there’s a perceived risk in the global economy, global cash seems to flow to the U.S. markets. To investors, it’s the safest place to be. This partly explains why stocks and bonds have moved in the same direction of late. The same forces that are pushing stock markets higher are helping the U.S. dollar to gain, too. It’s causing bond prices to rise and rates to fall. That said, markets remain volatile and rates do, too. The global economy is in flux and there are countless outside influences for which to account. As a loan officer, I watch mortgage-backed securities and track rates on a real-time basis. If you’re not working with a loan officer and want to work with me, I’m never too far from my phone or my email so just reach out anytime. I’ll help you try to time a market bottom so you don’t overpay on your rate or your fees. Or, you get more passive about it. Watch me on Twitter: Briancav I post updates all day long

Brian Cavanaugh Senior Mortgage Consultant Brian.Cavanaugh@WellsFargo.com www.BrianCavanaugh.com

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