Credit Rating Downgrade and Its Effect on Mortgage Rates

A lot of people have expressed concern about the effect of S&P’s downgrading the credit rating of the United States would have on mortgage interest rates.  You would think a lower rating would mean interest rates would move upwards. Surprise!  Rates are already incredibly low (30 year  fixed conventional in low 4’s) and rates are moving a little lower again today.  The stock market is a little spooked  and the Dow Jones average is down.  What that means is there is a flight to safety and people are moving funds out of the stock market and into the bond market which are perceived as being safer although bonds have the lower credit rating.  I’m sure there will some volatility with interest rates but in the overall scheme of things, it is likely that rates will stay near this favorable  range for awhile.

Larry Saunders
Mortgage Loan Originator
Mahone Mortgage, LLC
Office: 434-293-5200
Mobile: 434-466-5662
larrys@mindspring.com