Mortgage rates moved higher again today as investors reacted to updates about the coronavirus outbreak. This has been the dominant motivation for the big drop in rates over the past 3 weeks. Mortgage rates are determined by the bond market. When investors are worried about some negative impact on the global economy, bonds provide a safe haven to defend against risk and volatility. Excess demand for bonds pushes rates lower. As such, all the panic over coronavirus logically resulted in lower rates, but as of this week, things may be changing.
While there are still plenty of reasons to be concerned, the news cycle surrounding the outbreak has officially entered the “glimmer of hope” phase. For example, a pharmaceutical company in China announced that it received approval to begin treating the virus with a cocktail of potent antiviral drugs. The market treated that news as if a cure had been announced. Stocks surged back toward all-time highs and bonds continued giving up recent gains.
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Source: mortgagenewsdaily.comNew feed