Chinese and Italian became more than a couple of nights of great takeout food this week — the economic prospects of both countries were influences on the mortgage market.
Political discord in Italy and the prospect that the third largest economy in the EU might decide to leave the union has investors around the globe a little skittish. Paired with the potential for a trade war with China, as the U.S. may implement tariffs and investment restrictions, the U.S. bond market became its traditional safe haven for all that money not making it to the stock markets of the world. That drove bond rates down, which in turn kept mortgage rates steady — if not down slightly.
That slight decrease did little to impress U.S. consumers.
Applications were down for the week, after months of news indicating that mortgage rates would continue to rise. Consumers considering a purchase might be waiting for those rates to drop even further before acting on the American Dream of homeownership — likely not a wise move this time around. Recent experience has shown them if you “wait,” they will come. It is a prospect. But unlike Kevin Costner’s “Field of Dreams,” those consumers won’t likely come to see those great rates from the past just one more time.
Speaking of Americans taking journeys, that trip to a corn field in Iowa this summer may also impact the home buying market.
Rising rates and home prices have affordability down. For many consumers considering a home purchase that is a very real concern — but it isn’t tangible. They know it, but can’t touch it. It is not likely to keep them from taking the homebuying journey, though. It may in fact get them to take the trip. But things like the cost of gas can weigh heavily on a consumer. It is real. Consumers feel it. It isn’t comfortable. They get less likely to go to dinner or a movie. And that can make them less confident about a major purchase like a home.