By: Fred Arnold

If you like roller coasters, you don’t need to go to an amusement park.  Just watch the stock market over the last few days and you will get an incredible ride. However, if you want the full experience, then be an active investor. This way you can get the full jolt of the markets biggest rises and falls of 2014.  And you get to do this all in the same week.

On Tuesday the market dropped 275 points.  Growing fears about the economies of Europe and China are becoming more widespread.  The latest economic data coming from these two countries has not been strong.

As we know, what happens in other economies can directly impact what occurs in the U.S.

Wednesday there was jubilation on Wall Street as investors cheered and celebrated the release of the Fed’s FOMC minutes.  The Fed has continues to maintain that they will keep interest rates ultralow until the economy shows significant signs of strength.

Given that economic data in recent months has been anything but strong, that is a clear indicator that rates will remain low for quite some time.  Investors love low rates because it is likely then that the stock market will continue to rise.

Then came Thursday’s market plunge of 334 points which virtually wiped away almost all the gains the market has made this year.  The stock market sits at about ½ percent above where it started January 1st.  Thursday’s plunge was driven again by Europe’s and China’s week economies.

Real Estate and Stock Market Report

You may be asking yourself what changed between Tuesday and Thursday?  The answer is ridiculously simple.  On Tuesday a certain word was NOT used in the news feeds…on Thursday the word was used.  The word that can send a market into chaos is RECESSION.  Although neither economy is in a recession, the mere suggestion that it may happen is enough to freak out investors.

The one thing the stock market roller coaster has caused is to get investors to jump out of the stock market and over to the safe haven of the bond world.  Yields on bonds are at the lowest point of 2014 which means that mortgage rates are dropping.  Mortgage rates are now also at their lowest point of 2014.

With continued market turbulence it is likely mortgage rates will decline even further. This could be a nice boost for the housing market on both purchases and refinances.

The purchase index according to the Mortgage Bankers Association is up 2.0 percent. The refinance index jumped 5.0 percent for the week of October 3rd which is occurred prior to the significant rate declines from this week.

It is highly likely that we will see significant jumps in both indexes next week given the bond rally that has been occurring with the stock market craziness.

Housing Market

Next week’s potential market moving economic reports are:

Monday October 13th – Bond Market Closed for Columbus Day

Wednesday October 15th – MBA Mortgage Applications, Producer Price Index & Retail Sales

Thursday October 16th – First Time Jobless Claims, Industrial Production & Housing Market Index

Friday October 19th – Housing Starts

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at 661-505-4300.