ukraine affecting us markets

Effect of Ukraine Crisis on U.S. Mortgage Rates

April 7, 2014

We all know what’s going on in Ukraine, but is it having an effect on our U.S. mortgages?  The answer is yes.  How, exactly?  Well, the truth is this: the Ukraine crisis has caused a panic, which has added support to the United States Treasuries and mortgage-backed securities.  This panic came from the investors being more preoccupied with safeguarding their assets as opposed to making more money.

During times like the Ukraine crisis, investors are likely to focus on stronger investments such as US Treasuries, bonds and MBS.  The reason why is so that they can minimize their risk of losing money instead of making money.  When a large amount of investors are behaving like this, there is often a growth in Treasuries and MBS markets.  This is what we are currently seeing in our mortgage market.

We can see that the effect on the U.S. mortgage market this week has been very positive.  We are likely going to see more improvement as the overseas stock markets take a turn due to the crisis in Ukraine.  But, when the MBS markets and US Treasury are overbought, we should be ready to act extremely quickly in response to it turning around.  Mortgage rates will continue to keep rising once the investors have a steady grasp on the Ukraine situation.