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During the past two days, the average corresponding 30-year fixed rate for most lenders has moved to its lowest level since early February. In nuts-and-bolts terms, that’s a drop of over half a percent.
Yesterday was responsible for a large portion of the improvement as lenders continued to update their offerings in response to Wednesday afternoon’s bond market movement (courtesy of the Fed).
Bonds finally recovered today due to a flight to safety in the broader market. In other words, investors sold riskier assets like stocks and bought safer assets like bonds. Additional bond purchases result in lower rates, all other things being equal.
Can the improvement continue? It depends what you are willing to sacrifice for them. In the current case, the cost of lower rates would be more bad news for the banking system. While nothing catastrophic happened on that front today, the market is a bit jittery about the potential for more unexpected drama.
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