JPMorgan’s Pain May Be Homebuyers’ Gain

Photo of the New York Stock Exchange and the early home of JPMorgan Chase.
Trouble on Wall Street drives down mortgage rates.

Fallout from JPMorgan Chase’s $2 billion trading blunder and events in the eurozone continue to rattle the financial markets, but there’s a curious upside to the turmoil that could favor homebuyers.

Simply put, bad news on the economy can be good news for interest rates, and JPMorgan’s headache – plus uncertainly in Europe and talk of tough new financial regulations – may cause mortgage rates to fall significantly in the coming weeks, presenting an exceptional opportunity for homebuyers and current borrowers thinking about refinancing a mortgage.

Here’s why: Mortgage rates are closely aligned with the yield on 10-year U.S. Treasury bonds, and the yield falls as more bonds get bought up by investors.

As the trading practices at JPMorgan get a public airing, investors may very well decide that securities are a bad investment right now and turn to Treasurys. That, in turn, would drive down yields, and mortgage rates with them.

At Pacific Union International, we keep a close eye on Wall Street as well as Main Street, and we encourage buyers and sellers – and current borrowers, too – to pay close attention to Treasury yields and mortgage rates in the weeks ahead.

We’re ready to help, and so are our partners at Mortgage Services Professionals.

(Photo courtesy of Luisvilla, via Flickr.)

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