Bank of America Refinance Mortgage Rates – Interest Rates Higher in 2010?
Posted on | November 5, 2009 | No Comments
Bank of America refinance mortgage rates have been extremely low for most of 2009 but will 2010 be a different story. For almost the entire year of 2009 the Federal Reserve Bank has been creating artificially low mortgage rates by purchasing US Treasuries and Mortgage Backed Securities (MBS). The process of doing this has helped to keep mortgage rates near or below the 5% range for much of 2009.
This has been great news for those who are trying to lock into a low mortgage interest rate today but what does is mean for the future of mortgage rates? If the Fed continues its quantitative easing and concludes the MBS purchase program by March of 2010 as they have stated then it is hard to argue that mortgage rates are not going to go higher. This is bad news for future home owners but the reality of the beast.
The Fed has already finished the US Treasuries purchase program; November is the first month that the Fed will not make these purchases. We have already seen a leg up in treasury yields since this has happened. When the Fed made the announcement at the beginning of October the 10 year treasury rate yield bounced off its 200 day moving average and has moved higher since. It will be interesting to see just how much higher yields go.
For those of you who may not know, there is a strong correlation between the 30 year fixed mortgage rate and the 10 year treasury rate yield. As one moves higher the other generally follows. With the beginning of an up trend taking place for the 10 year yield it seems very likely that we are going to see the 30 year fixed mortgage rate move higher as well. Now might be the time to lock in to low rates because they may be gone soon.
Bank of America and many other mortgage lenders have spent a great deal of money to advertise their currently low mortgage rates. It will be interesting to see if this heavy marketing pays off in the long run. There is no doubt that Bank of America is all over the place when it comes to home loans but lets see if that correlates to higher earnings on their balance sheet.
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Author: Alan Lake
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