Mortgage Update: March 13

After recent banking events, what’s the impact on long-term rates?

Over the last week and over the weekend, a lot has happened in the banking world. There were instances with three banks where regulators had to step in and stop customers from pulling out deposits. The government then intervened and said that everything will be insured, even above the FDIC limit.

So, why did this happen? Those banks got overleveraged. They were not diversified in their holdings. A combination of different things created this issue. The government has stepped in to insure those, which will help ease some nervousness and add confidence for customers, knowing their money is safe in those banks.

What does that mean for interest rates? With interest rates, a lot of money goes into what's called a “Flight to Quality.” Bonds are safe. Thus, more and more money is being poured into bonds starting today. This has decreased long-term interest rates for new locks for borrowers that are locking in their interest rates today.

Things could change pretty quickly. Rates might go a little bit lower or they might creep back up. It changes every single day. Because of the dynamics and combination of everything that has happened, consumers are benefiting with lower long-term interest rates, at least for today.

We'll see what happens over the next few days. Please contact us if you want to have a one-on-one conversation about this.

Please email mortgages@johnadamsmortgage.com to get in touch with our team.