If the secret of the stock market is to “buy low and sell high”, the mantra of the mortgage business should be “bad news is good news”. Typically, when financial markets are belted with bad news such as high gas prices, towering debt and lack of confidence in company profits, the traders attempt to move assets into traditionally safer investments such as bonds.

Conventional mortgage rates are priced on mortgage backed securities that usually march with the bellwether 10 Year Treasury bond. Over the past few months there has been a steady increase in the demand for these bonds. Investors are willing to pay more for less return (known as the yield) because they perceive bonds as a more stable alternative than stocks.

The current view of the American economy is that it will not improve quickly so there is little impetus for the bond market to decline any time soon. This means that rates will probably stay at today’s lows or maybe even inch lower. Now is a great time to lock into the lowest fixed rates in over 4 years!