Hey, take a deep breath, hold it, now slowly exhale.. good.. now do that one more time: Deep breath.. hold it.. exhale… Doesn’t that feel better?
Now keep taking slow, relaxed breaths because we want to talk to you about something that feels a little scary. We promise it won’t by the time we’re done, but sometimes just being told not to panic makes you panic a little.
We’re going to talk about the stock market (breathe) and mortgage rates (deep, slow breaths, friend) and by the time we’re done it will all seem ok, OK?
Don’t Panic About the Stock Market
For many of us the stock market is a sort of mysterious phenomenon that exists in the background and does… uh.. well, we really don’t know what it does, we just know that there’s money involved, sometimes our money. Then, something crazy happens and we still don’t know what it does, we just know that we wish we had taken the time to understand it before the crazy started.
During the week of February 4th-10th, 2018 (last week as of this writing) the Dow Jones Industrial Average (‘The Dow’ to you and me) was down 9% from an all-time high on January 26th, 2018. Yes, that sounds like a big deal and, no, the nightly news wasn’t lying when they told you that not one, but two drops of 1000 points each in the same week is highly unusual. There’s a lot going on here and it’s all pretty normal in the grand scheme of things.
Our ‘ol buddy The Dow fluctuates, that’s just its thing, and if it’s not your job to pay attention to those fluctuations, they just happen, and you keep living your life. Along with those normal fluctuations, the Dow can experience a “Correction” - that’s what experts call it when we see a drop of 10% - which we were close to. All of this is totally normal, it’s just that when you see someone you went to high school with posting gloom and doom about it online, you don’t know how to react and panic feels pretty natural.
What You Can Do Instead
Let’s face it, you’re not worried about the stock market. You’re worried about how the stock market affects your ability to plan your life; whether you can afford college, retirement, or a wedding for your golden retriever, right?
Totally and completely normal! Great, in fact!
Listen, we don’t like to see you stressed, but if that little bit of panic is the thing that makes you consider taking a closer look at your financial picture, we’re here to help! Times like this are a natural and awesome time to sit down with our financial advisor, Jason Buchinger and talk it out. You tell him your plans, goals, or what’s keeping you awake at night and he’ll work with you to build a plan that fits uniquely you.
Plus, there’s no cost or obligation to meet with Jason. He’ll take the time to really listen and recommend the best moves for you, even if that means you don’t move at all. If you’re ready to find out more, check out our Retirement & Investment Services page now.
Don’t Panic About Mortgage Rates
Sure, yes, we’ll grant you that mortgage rates have been rock-bottom low for what seems like a long time and it feels a little yucky to hear that those rates have started to climb. In fact, not to overdose you on yuck but… experts predict that those rates will continue to rise incrementally. (Notice we said ‘incrementally’? Little by little is a whole lot less scary, right?)
Just like the Dow, mortgage rates tend to fluctuate. What has changed since December of 2017, though, is a steady rise to levels we haven’t reached since 2011. Coupled with other economic factors (again, our friend The Dow) that’s making the kind of headlines that make consumers sweat.
None of that is a reason to panic.
What You Can Do Instead
First, put things in perspective and consider this: even though they’ve climbed, mortgage rates are still historically low and homes are still affordable for the average joe. (We’re lookin’ at you, Joe.).
The Federal Reserve can take part of the credit for the super-low rates we’ve enjoyed. They’ve worked hard to keep rates low, make lending available to consumers, and help with economic recovery.
Now, here’s the thing guys, the economy does actually seem to be recovering. Unemployment is low, the average salary increase for American workers at the end of 2017 was 3%, things are looking up and that means we have to expect to prices, including rates, to rebound too.
The good news is that when we pay more for things, like our mortgage, we also start to earn more on our savings. For Example: In the early 1980’s when mortgage rates topped out OVER 18%, you could also get a Certificate of Deposit for 15% so.. yeah, it’s a balancing act.
Oh! Wait!! Keep breathing!! We’re not saying that rates are going to rebound that high AT ALL. There was a really specific set of conditions at that time - including double digit inflation - and those rates were a part of the strategy to course correct and get the US economy back under control. It took some time, but it worked, and the lessons learned, and regulations that happen, from those kinds of trying times can prevent us from reliving them.
Next, think about your best move. Are you thinking of buying a home this year? Instead of just pushing the panic button and scrapping that plan, apply and lock in your rate now. Experts (those darn experts) predict that mortgage rates will keep rising slowly through 2018 so don’t get caught waiting for them to drop.
Maybe you’re worried that you missed out on the best time to refinance? Good news! If the last time you bought or refinanced was before 2008, you could stand to save a ton of money by refinancing today. Add in the extra-sweet chance that you are making more money now that 10 years ago and you could even lock in on a lower rate mortgage with a shorter term and save even more!
How ‘bout that? You’re not just NOT PANICKING, you’re saving money left and right!
Now, what if you know you’ll want to buy a house someday, you just don’t know when, and thinking about what rates might be when you’re ready is causing you some heartburn? Well, our question would have to be “What are you waiting for?”.
Sure, maybe you’re just starting out and your dream house (you know, the one with the indoor lap-pool and river rock fire place in the dining room?) is a little out of your reach. That doesn’t mean your mom’s basement is the only other option. (No, really, she asked us to mention that.) There’s a real chance that you could be hanging up your coat (like a real adult) in the closet of your own, happy, very first home. Oh, and building great credit while you take advantage of mortgage rates that are still low.
It turns out that there are a lot of things you could do instead of panicking about mortgage rates, and they all mean you get to chat with someone from our Mortgage Team. (Huh. It’s almost like we planned that :). Get started by hopping over to our Mortgage Center page where you can start your application, browse some helpful info, and find out more about our Mortgage Team.
Don’t Panic About Anything
Hey! You made it all the way to the end and look, you’re still breathing and everything. Proud of you.
Listen, we’re trying to keep it light and encouraging, but it doesn’t mean we don’t take the things that panic you seriously. You see, we’ve been here a long time (Almost 70 years) and if there’s one thing we’ve learned it’s that no amount of panic has ever helped. Even if you’re really good at it. Time after time the solution is to take a deep breath, asses the situation, find out what the experts have to say, and keep-on-keepin’-on. And we’re right here for you to do just that.
Resources:
We got a lot of great information from our buddy Bruce Goetsch, National Sales Manager at Servion. He has a knack for explaining things in a way humans can understand. We really appreciate his help.
We also found this article on CNN.com. It has a lot of good details about The Dow that we thought you’d like to see.