JPMorgan’s Pain May Be Marin County Homebuyers’ Gain

Fallout from JPMorgan Chase’s $2 billion trading blunder and events in the eurozone continue to rattle the financial markets, but there’s a curious upside to the turmoil that could favor homebuyers.

Simply put, bad news on the economy can be good news for interest rates, and JPMorgan’s headache – plus uncertainly in Europe and talk of tough new financial regulations – may cause mortgage rates to fall significantly in the coming weeks, presenting an exceptional opportunity for homebuyers and current borrowers thinking about refinancing a mortgage.

Here’s why: Mortgage rates are closely aligned with the yield on 10-year U.S. Treasury bonds, and the yield falls as more bonds get bought up by investors.

As the trading practices at JPMorgan get a public airing, investors may very well decide that securities are a bad investment right now and turn to Treasurys. That, in turn, would drive down yields, and mortgage rates with them.

At Pacific Union International, we keep a close eye on Wall Street as well as Main Street, and we encourage buyers and sellers – and current borrowers, too – to pay close attention to Treasury yields and mortgage rates in the weeks ahead.