Mortgage rates are still taking advantage of the stock market selloff and the trend looks like it could continue for several weeks as stocks have yet to find a bottom according to many analysts. Just last Thursday Freddie Mac reported the average 30 year fixed rate dropped to 3.79% from 3.81% for a single-family, primary residence. For investor properties the rate is around 4.00%. These rates touch those seen as far back as last fall. It was around Q2 of last year when it was widely expected the Fed would make the first Fed Funds rate increase in 10 years before the end of the year and as late as last October investors were predicting the second rate bump in March then changed their minds to June and now many are thinking the Fed could hold off for the entire year. The FOMC comments last week seemed to confirm the Fed’s “accommodative” approach.

So will these predictions hold true? If stocks can’t find their focus the safety play will be in bonds and mortgage rates will benefit. The driver now seems to be the glut of oil on the market and the oil industry in general. Oil companies are shedding employees as well as profits and with new production hitting the market and millions of barrels still in storage awaiting a sale we could see even more layoffs which will soon be seen in future unemployment reports and non-farm payroll numbers.

No one really expects rates to fall to historic lows as they did in late 2012 when rates for rental properties hovered near 3.50%. For rates to fall a full quarter of a percent, our economy along with the rest of the world will be mired in yet another financial mess. Instead, we may just be plod along and wait for the next economic cycle to boomerang our way. Until then, financing costs for real estate investors should remain low while rental rates for tenants remain high.