Mortgage Rates Decrease Following Bank Closures

Global markets had a turbulent week as investors reacted to the news of several bank failures, as well as a surprise rate hike from the European Central Bank (ECB). Mortgage rates dropped this week in the wake of the bank collapses, reversing course after rising half a percentage point over the past month. On Wall Street, stocks rallied on news that ailing First Republic Bank could be rescued by a consortium of large banks, including JPMorgan Chase and Morgan Stanley. The ECB surprised investors with an aggressive half-point rate hike, which caused European bank stocks to wobble. Meanwhile, US investors are betting on an 80% chance of a quarter percentage point rate hike from the Federal Reserve next week. Treasury Secretary Janet Yellen testified to Congress that the US banking system "remains sound" and that Americans' bank deposits are secure. The New York Stock Exchange halted trading in shares of First Republic Bank after the stock fell sharply, while shares of Credit Suisse gained 18%. It is clear that investors are still worried about the banking sector, but the US government has taken steps to ensure that customers’ deposits are safe.