Source: Newsweek —
The collapse of 40-year-old California-headquartered Silicon Valley Bank (SVB) last week will have a significant impact on mortgage rates and the U.S. housing market, Newsweek has been told.
Commenting on the meltdown of the SVB—which had grown to be the 16th largest in the U.S. and a favorite among tech startups, and the following shut down of New York-based Signature Bank, which regulators feared could threaten the stability of the entire financial system if left open—Armada ETF Advisors’ Portfolio Manager Al Otero said that this apparent earthquake in the banking sector could translate into positive change for the housing market.
“The collapse of SVB late last week coupled with reports over the weekend that the Fed will undertake a major policy shift to guard against the risk of contagion, has put interest rate markets into a tailspin … causing a rally in rates across the yield curve and an expectation that the Fed will now ‘pause’ raising the funds rate at its March 21-22 policy session,” Otero told Newsweek.
“The implications are that we could see a material reduction in mortgage rates going into the spring sales season, which would be a substantial positive for the housing market.”