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Silicon Valley Bank Closure: Mortgage Impact

It’s been all over the news but last week silicon valley bank and signature collapsed and its generating all kinds of ripple effects across markets. Since we know how to stay in our lane, let’s look at what this means for mortgages and the housing market. The easy answer is that mortgage rates dropped quickly but it has nothing to do with the bank. Mortgage rates are tied to bonds and the bond market is heavily influenced by FED decisions. The idea here is that the collapse of the banks may lead the FED to reduce or pause rate hikes in the near term. Most experts don’t look at this event as the catalyst for mortgage rates to begin a sustained decline but it may kick off the spring buying season to a different tune. Inflation remains the adversary of low rates. Higher rates led to a slower purchase market and most believe the purchase market will rebound quickly if interest rates dip. Buyer demand is still high, those are just on the sidelines waiting for affordability.