Texas Mortgage Rate Update 8/12/2008

Concerns about sagging global economic growth has contributed to another surge in the value of the dollar on the world’s currency exchanges.

The dollar index, which tracks the value of the dollar against the currencies of most industrialized nations, rose to its highest level since February this morning, marking its eight straight day of gains. The rising dollar prompted more selling of key commodities like gold and oil. Crude oil fell about $1.00 per barrel despite concerns over supply disruptions created by the Russia-Georgia conflict.

The main factor in all of this from a mortgage market perspective is that one of the biggest headwinds facing the prospect for lower Texas mortgage interest rates, commodity stoked inflation pressures, may start to fade to nothing more than a modest breeze in coming months.

The firming dollar and a increasing expectation among investors that the Federal Reserve will not likely hike short-term interest rates this year will likely benefit stocks more than bonds, as capital seeks the highest possible return in relation to accepted risk tolerances.

The longer-term good news for the prospect of steady to fractionally lower Texas mortgage interest rates is that the developing fundamental shift in the global economy will likely do nothing but increase the attractiveness of dollar-denominated assets like notes, bonds and mortgage-backed securities for foreign investors. Foreign capital resources in our domestic credit markets have essentially been relegated to the sidelines over the past three-years as the value of the dollar suffered a major tailspin. In my judgment, the value of the dollar is very vulnerable to additional near-term floundering at lower levels — before a sustained uptrend begins in earnest.

With little else in the way of other significant economic news for the balance of the day — the trend trajectory of Texas mortgage interest rates will likely be most influenced by stock and oil price action. Higher stock/oil prices will probably drag Texas mortgage interest rates higher while lower stock/oil prices will tend to be supportive of steady to fractionally lower Texas rates.

As always, If you have ever have a question on whether it is the best time for you to refinance your Texas loan or what interest rate you can get when buying your next Texas home, feel free to give us a call or shoot us an email by filling in your information on the right hand side of this page.