Mortgage Rates Drop AGAIN in the Bay Area- Pleasanton Home Buyers Take Advantage

Mortgage Rates Drop AGAIN in the Bay Area- Pleasanton Home Buyers Take Advantage

Mortgage rates continue drifting downward across the Bay Area, despite — or because of — a ratings downgrade on long-term U.S. government debt. Standard & Poors issued a single-notch downgrade after Friday’s market close, from AAA to AA+.

Of the roughly $9.4 billion in publicly-held U.S. debt, 72 percent is long-term (i.e. with duration of 2 years or longer).

U.S. short-term debt was not downgraded.

The Direction Mortgage Rates are Headed

When an entity — government, business, or other — is cited for a credit downgrade, it means that the risk of lending money to that entity has increased. In theory, higher risk should lead to higher borrowing costs and higher consumer rates.

Except in today’s U.S. Treasury and mortgage bond markets, the opposite is occurring. U.S.-backed bonds are in demand, leading rates lower. It’s an unexpected response to the S&P downgrade.

There are 3 main reasons why mortgage rates aren’t rising.

First, Wall Street is “brushing off” S&P’s downgrade, citing the rating agency’s opinion as flawed. This is, in part, the result of a supposed “math error” in the S&P findings, as caught by the U.S. Treasury.

Second, global finance leaders have made public statements since the Friday downgrade re-asserting their faith in the U.S. government’s ability to repay its debts. This is helped stabilize bonds as well.

And, third, of the three major rating agencies, only Standard & Poor’s downgraded long-term U.S. debt. Competitors Moody’s and Fitch instead chose to re-affirm the top-status rating for U.S. government-issued debt after last week’s debt ceiling accord.

If Buffett says the U.S. is safe—It is

The likely cause for falling rates today is that the global economy is showing signs of a slowdown and the U.S. Treasury market remains the largest and most liquid bond market in the world. Ergo, they’re relatively safe — despite the credit rating of the nation backing them.

In Tumultuous Times Have the right team in place

The market is moving at a RAPID pace…have the right team in place to help you capitalize on it. I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton I am in a unique position to help you capitalize at any point in the market. Contact me below today to help you with your purchase or refinance.

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