…You Thought the Line at Costco was Long

Mortgage Company Pompano Beach, FL | Home Mortgage Company

Have you ever been in the back of the line, whether it’s your favorite Big Box Store, the bank, or even at your favorite Disney World ride, and think “Man, what are they giving away up there?” Today, they are giving away money.

With the panic gripping each aspect of the market over Coronavirus, Central Banks around the world have capitulated, meaning, in panic, they are trying to get ahead of something they don’t know, or find a bottom to something that seems, bottomless.

The driver of mortgage rates in the united states, is the Ten Year Treasury. This index is literally at historic lows, like real historic, as in never before has been this low. This index is literally how the world takes its temperature.

As this index falls, so do mortgage interest rates. And by now, everyone knows it, so they line up for the product, which in this case is historically low interest rates. Some, like trying to catch a falling knife, believe it will even go lower, waiting to time the market perfectly. “Hey, you see that line over there…get on it”. You and about 100 million others are trying to get ”the lowest interest rate”, and with that crush, comes delays. Underwriting times which were 24 hours, at the beginning of March, are now at 96 hours. Mortgages that typically close in 20-30 days, are now closing in 30-45 days, and that is for people who are already in the system.

History tells us that this kind of “panic capitulation” will be V shaped, meaning, there is more the likelihood of seeing the 10 Year Treasury at 1.75 than .5, at which time, with your head in your hands, you will be upset because “you missed the market”.

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