30 Year Fixed Mortgage Rates – Lower Interest Rates Ahead?
Posted on | September 10, 2009 | No Comments
The average for 30 year fixed mortgage rates has been right at 5% for the last few weeks and little has been done to change that. The 10 year treasury rate has been stable to down and the Federal Reserve Bank continues to buy mortgage backed securities and US Treasuries; at least until the end of October. At the end of October the Fed has stated that they want to end the buying of US Treasuries but we will see if that is truly the case.
The main reason that 30 year fixed mortgage rates have remained at historic lows is the fact that the Federal Reserve Bank has done everything in their power to keep interest rates at low levels. The overnight Fed Funds Rate has been basically at zero for quite some time. This coupled with the fact that the Federal Reserve Bank is buying significant amounts of US Treasuries and mortgage backed securities is helping rates to stay low.
The question that many home owners and future home owners have is “are lower mortgage interest rates ahead?” No one really knows the answer to this as the Federal Reserve Bank really holds the keys to the car. If the Fed stops buying Treasuries by the end of October and they also stop the buying of mortgage backed securities by year end, we are likely to see mortgage interest rates move higher.
The interesting part of the entire scenario is that the Fed and President Obama have worked very hard to keep interest rates low to help the economy. Now that the economy is looking a little bit better are they going to take their foot off the gas a little bit too soon? If they do we could find ourselves stuck in this recession for much longer because higher interest rates are very bad news for the economy.
Overall, 30 year fixed mortgage rates are still near an all time low. If you have been thinking about refinancing or getting your first mortgage now is the time to take action. If you wait and try to time the market bottom you may be risking the change to lock in at a mortgage interest rate near 5%.
Author: Heather Best
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