Mortgage rates follow stock market on wild ride

Mortgage rates followed the stock market on a wild roller coaster ride the past two weeks. The stock market has seen some of the largest gains in losses in history over the past two weeks. Investors who have been following the value of their retirement accounts have probably had many sleepless nights as the stock maret appeared to be on a nose dive down to under the 10,000 level. Following the collapse of Lehman Bros and the near collapse of AIG investors around the world were beginning to bail out of the market at a rapid pace.

The market staged a remarkable turnaround and the first course that helped to change it’s direction was a ruling out of Great Britain that the selling of financial stocks short would be temporarily banned. Soon after this news arrived, the SEC also followed suit with an announcement that shorting almost 800 financial related stocks in the U.S. would also be banned. This news was followed up with a report that the government would be creating a fund to help to purchase bad mortgage and credit debts and improve the liquidity in the credit markets.

Mortgage rates ended the week heading up as investors pulled money out of bonds and invested into equity postions. Mortgage rates which were well under six percent on the 8th of September are now hovering in the low to mid six percent range. The future remains uncertain as the markets will continue to digest information and react to the credit markets. Homeowners need to be decisive in making decisions to refinance their homes or look at buying new homes.