Mortgage rates have dropped to a three-year low, according to data from Bankrate.com, and the 30-year fixed is now at 3.61 percent—a mere 11 basis points above the all-time low set in December 2012. Is this a good cue to panic?
According to Mark Hamrick (pictured right), Bankrate.com’s senior economic analyst, the answer is no—even in view of the tumult created in the financial markets by last week’s Brexit vote.
“Why would anyone panic?” said Hamrick in an interview with National Mortgage Professional Magazine. “The financial markets were not prepared for that outcome. But we’ve already seen a rebound in the equities market.”
Still, the post-Brexit reverberations have created uncertainty on this side of the Atlantic, including a great deal of speculation on whether the Federal Reserve would hit the brakes on rate hikes or even backpedal and lower rates. For his part, Hamrick believed it was futile to forecast the central bank’s actions.
“I don’t think anyone is in a good position to make predictions,” he said. “The Fed itself is not good making those types of predictions.”
Hamrick added that some degree of current uncertainty on the markets can be tied to failed predictions on how the U.S. economy would respond to the 2008 recession.
“A few years ago, some people thought we’d be along the path of normalization by now,” he continued. “But the recovery was slow. The good news is that it was a steady recovery, but the bad news is that has been frustratingly slow.”
As for the housing market, Hamrick noted the latest S&P/Case-Shiller data pointing to five percent year-over-year home price increases, but he also noted the wages were not rising with the same gusto and home builders are not expanding the inventory of available properties.
“There is an imbalance,” he said. “How long can that continue. There is one certain answer: Not forever!”
