International turmoil can impact mortgage rates

There has been some recent movement in mortgage rates the last week or so, which can be attributed to the situation in Ukraine. But despite some moderate fluctuation, those international tensions didn’t result in much of a net change in mortgage rates.

In periods of turmoil, investors often tend to shift to a defensive position with more low-risk assets (often called a “flight to safety in financial markets). There are a lot of explanations as for this strategy. When there are major political divides on important issues like the debt ceiling, investors simply want to limit risk. Similarly, investors will move assets in periods of tension in financial markets. There was a massive “flight to safety” when debt issues in weaker Euro zone countries posed a threat to the global banking system.

Last week, the chance for a military conflict resulted in the latest flight to safety. Russia sent troops into Ukraine and as a result global stock markets were hit with major losses while mortgage rates improved. Russian President Vladimir Putin eased off the use of military force on Tuesday, March 4, prompting a reverse in the financial markets. Stocks bounced back and recovered their losses of the previous day and mortgage rates went up.

It’s expected that there will be an increase of 150,000 jobs in February in the Employment Report that will be released March 7. Poor weather in February again will cause investors to wonder how accurate the results reflect the real strength of the economy, however. After the employment data, much attention will be given to retail sales. If there are further developments in the Ukraine, it could impact mortgage rates as well. 

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