Financing Homes in Lake Tahoe and Truckee since 1992.

Lake Tahoe Home Loans and Lake Tahoe Mortgage Rates

The Waiting Continues-Commentary ~ August 16, 2013

 We’ve been waiting for clearer and stronger indications of where interest rates and the economy may be headed. In truth, the economy may be characterized by this kind of waiting now because there is no real sense that a deeper economic trend is being veiled by circumstances beyond our seeing. There is, instead, a sense that no definite economic trend is to be found just now. Period.

 This, as we’ve seen many times, is precisely what most market investors dislike intensely. The best way to make profits, after all, is to discern the market’s actual direction and base investment decisions on what seems relatively clear about future market movements and to do so before other investors see it. If nothing seems relatively clear about the future, however, many people—whether private investors in stocks or bonds or commodities, or businesses deciding whether to invest funds in their own growth—retreat to the sidelines and wait for more clarity and certainty.

 Examples abound of generally inconsequential movements among interest rates, commodity prices, and new mortgage applications in recent weeks. On the one hand—as mortgage interest rates make very slight retreats from their recent highs—it appears that the economy and, notably, the real estate market’s growth is slowing. This perception was reinforced recently by the wavering of the number of applications for new mortgages, which fell last week.

 On the other hand, we seem nearly becalmed in a big river whose potential turbulence is hidden in its unfathomable depths. There is, at present, no knowing what the future will bring.

 We have been given a few clues: Interest rates, by displaying a tendency to remain low, suggest that there is little building confidence that the economy may be about to grow quickly. The ups and downs of new mortgage applications, similarly, suggest no lasting confidence that the real estate market is improving, and the movements of rates aren’t even leading us to believe that they are likely to rise much—or, for that matter, to fall—because the demand for refis remains muted.

 There is nothing much happening here—another quiet week at Lake Woebegone—but we should remain vigilant. Election campaigning in Germany…political instability in Egypt…complacency about the “sequester”…the gradual dismantling of QE3…choosing a replacement for the Chairman of the Federal Reserve…and on and on. There are just too many wild cards that could become visible at any moment. Their greater visibilty may well inspire increasing volatility before too long.