The year 2015 has started out on the right foot, with an actual improvement in the bond market bringing mortgage rates lower than what markets have seen in about the past 19 months. The cause of this recent phenomenon isn’t linked to any one particular occurrence but rather as shown below, the interconnectedness of many happenings in the global economy has created the perfect environment for rates to continue dropping lower and lower.
The result has translated into the following:
- S. 30 year bond at the lowest level since August 2012
- Ten Year Treasury Bill at 1.97
To keep things in perspective, while the Ten Year T-Bill isn’t at the lowest we’ve seen (1.379 in July of 2012 during the last refinance boom) this time last year the T-Bill was at 2.976. Because rates typically follow Ten Year treasuries, we should see the Ten Year T-Bill and 30-year bond continue to decrease and we will likely see rates follow suit as well. Although the Ten Year T-Bill has dropped significantly compared to last year, experts are thinking that in order for this to spark a significant refinance boom, the Ten Year T-Bill would have to fall below or hover around 1.5 and while we are still a ways away from this, many will still see this as an opportune time to cash in on the benefits of lower rates and we could in turn see an increase in the number of refinance applications.
For the remainder of the week, it is hard to say how rates may change. As the market returns to full momentum following last week’s holiday, we will get a better idea of whether these recent lows will continue or if we are likely to see an upward trend as markets normalize following current economic and global developments.