Mortgage Rates and the Falling Dollar
As of Monday, November 22, 2004, mortgage rates are steadily
declining. From the end of last week to the beginning of this
one, the rate has dropped from 4.20 percent to 4.19.
This may not sound like a lot but this was over just one weekend
period. The Fannie Mae and Freddie Mac index also shows a change
in the net yields required now compared to a few weeks ago. The
results of the FM’s are in direct correlation to the price
of mortgage money, meaning investors will not be likely to invest.
The budget deficit is definitely having a threatening influence
on Wall Street. Alan Greenspan, chairman of the Federal Reserve,
recently made a statement that the value of a dollar will continue
to fall in relation to other currencies. This means that it will
be more expensive for Americans to travel abroad. It also means
American exports will be cheaper in other countries, while imports
from those countries will be more costly to us. Not only does
this mean our standard of living will worsen, but foreign investors
will become disenchanted.
Investors should not jump to conclusions and start worrying too
soon. As is per usual, the economy changes and the market changes
along with it. Nothing is ever for sure, and no matter how bad
it gets, it is bound to change (unfortunately this is the same
when the market is good).
For you, the consumer, a decrease in mortgage rates is good!
You will be able to purchase that home you have been wanting with
a much lower interest rate than before. Although it may rise again
in the near future, a fixed-rate mortgage can guarantee you the
same interest rate for the entire loan and you will benefit from
the rate drop even if the economy does not.