The Only Constant is Change

by C. J. Kerls, Guarantee Mortgage
It’s been said that “the only constant is change.” And we certainly saw a lot of changes in 2011. As we ring in 2012, here’s a look at how 2011 ended, and what lies ahead for home loan rates.

The Stock and Bond Markets were closed on Monday in observance of the Christmas holiday, and it was a fairly quiet week after that. However, there was some good news, as Consumer Confidence came in at 64.5 for December. Not only was this the third highest number reported for 2011, but this important index has jumped nearly 25 points in the past three months and now sits at its highest level since April. What’s more, this report followed the recent Consumer Sentiment Index reading, which also came in at its highest level in six months.

While consumers certainly appear more optimistic here, the news hasn’t been as positive out of Europe. The Euro struggled somewhat last week after just an okay performance from one of Italy’s Bond auctions. While the country sold all their debt at yields slightly lower than where they were just the day prior, yields are still historically high (near 7% on 10-Year Notes) for a country that has a lot of debt to service and refinance in the coming year. In addition, Spain’s government announced on Friday that the country’s budget deficit will surpass 8%. Spain also unveiled new austerity measures to combat their economic and budgetary difficulties.

So what does all of this mean for home loan rates here in the U.S. in 2012?

The uncertainty in Europe should continue to help Bonds and home loan rates, as investors will see our Bonds as a safe haven for their money – and remember, home loan rates are tied to Mortgage Bonds, so rates typically improve as Mortgage Bonds improve. However, continued good economic reports here in the U.S. could balance out those improvements. That’s because investors will typically move their money out of Bonds and into Stocks during good economic times, so they can take advantage of gains.

The bottom line is that whatever lies ahead this year, 2012 begins with home loan rates near historic lows…which makes this a great time to purchase or refinance a home.  Let me know if I can answer any questions at all for you or your clients.

C. J. Kerls is a Managing Partner of Guarantee Mortgage, and he can be reached at 415-586-6003 or

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