Earlier this month, the worst of the COVID-19 pandemic seemed to be behind us, and housing economists were certain high mortgage rates were in our future.
But then came the discovery of the omicron variant, which brought a renewed and unwelcome dose of uncertainty into everyone’s lives.
Now, just as it is too early to say how concerned we are all about this new development, it is unlikely that these expectations will hold steady.
Shmuel Shaywitz, President and Chief Lending Officer at approved financing.
Usually, investors put their money into bonds and treasuries in times of uncertainty, and this investment financing tends to flow from the stock market.
Bonds are a safe, low-risk investment, attractive to people who don’t have an appetite for a lot of uncertainty, and for investors looking for something stable in an uncertain time.
Usually bond rates and mortgage interest rates It has an inverse relationshipHigher bond prices lower the cost of mortgage interest rates.
But this was generally not the case last year.
“During Covid, bond markets and stock markets alike were benefiting due to Fed intervention benefiting everyone through artificial market manipulation,” Chayewitz says.
He said, “When it was clear that the Covid pandemic had reached the United States, the Federal Reserve acted aggressively. This was done through stimulus and monetary policy such as quantitative easing, aggressive bonds and Treasury purchases to add massive liquidity to the markets and to lower prices.”
Last week, Federal Reserve Chairman Jerome Powell told a congressional committee that he was considering ending the central bank’s bond purchases, as the economy appeared to be stabilizing. But this was before the advent of the omicron.
However, so far, Šiewicz said he is cautious but not overly concerned about the effects of variables on mortgages.
“It’s not likely that prices will drop further because of the new alternative from Omicron,” he says.
“While there is concern in particular about what is happening in other countries, bond analysts are now cautiously optimistic and not considering the information we are saying now that it will have any significant impact on the markets,” he adds. Of course that depends on what we say globally, as of today.”