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With the wild moves in the bond market of late, my trading partner called
his banker (he had just refinanced a month ago) to see what had happened to
mortgage rates. He was told that rates have gone up one full percentage
point in the last week. He was also told that mortgage rates were actually
creeping up as bond futures made their last lunge up. Interesting.
I'm not much of an economist, but it seems that this sort of volatility
will slam the brakes on a real estate market that should be thriving. With
rates low, people (and companies) should be taking advantage of the
opportunity to build, buy and expand, but I suspect banks and large
builders will delay lending/borrowing plans for a couple of weeks to see
where rates settle out. If you were president of a bank would you want to
issue a big loan only to find out in a week that your rates were off by a
full percentage point?
Any bankers or builders out there?
If real estate does suddenly stop, I suspect the impact on the economy will
be significant.
Carl
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