As stocks continue the trend from last week - the gains seen in the stock market are being eroded. What is driving this is the concern that Japan and Europe are slowing down. And, on top of this, as oil prices drop stocks go with them. Lastly, consumer spending came in below expectations. All of this drives traders to drive stocks downward.
On the bright side, this should help long term interest rates (mortgage rates) to either go down or hold steady based on previous trends. Some lenders clearly are holding rates steady and booking profits on the increased gains. However, others may lower rates to pick up desperately needed volume in new mortgage loans.
Meanwhile we should be keeping an eye on the Ebola crisis, that clearly has clearly entered the United States. US cases include the two initial Atlanta cases that then grew to a 3rd person who entered without symptoms and died in Dallas. Then we heard of another case of a journalist in the Midwest who has Ebola. Now, two health care workers in Dallas have been infected. If we strip this down we have to realize that there most likely will be more cases - which means Ebola has arrived in the United States and is no longer a West African problem.
So, we are closing out the 3rd quarter with many pressures. For those of us in the mortgage industry - sales will probably remain weak despite lower rates. Those who had higher rates have mostly re-financed and the remaining can't with the tougher lender standards. That leaves lenders looking at the purchase market that has been stagnant as that is tied to consumer confidence levels.
With Europe and Japan having economic issues, rising US dollar - we are facing a possible slow down in the US economy which will most likely bring lower rates but fewer new home and existing home prices.
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