Mortgage Rates Set to Hit All Time Lows in October?
Posted on | September 30, 2009 | No Comments
Mortgage rates have defied all logic by heading lower even after the Federal Reserve Bank announced that they are no long going to buy US Treasuries after October. Early this morning 30 year mortgage rates got as low as 4.84% which is a September and summer low. There has been a slight move higher since then but it still begs the question, “Will mortgage rates set an all time low in the month of October?”
If an all time low is possible it will have to happen in the month of October because after Halloween the Federal Reserve Bank will stop buying US Treasuries by the end of the month. When the Fed stops buying US Treasuries you can expect to see an increase in treasury yields until they become attractive to foreign investors. Without the assistance of the Fed and foreign investors there is little doubt that mortgage rates are going to go up as treasury yields increase.
No one knows how much yields will have to increase to be attractive to foreign investors but we can assume that 3.3% on the 10 year yield is not attractive. If the 10 year yield pushes towards 4% like it did during the summer there is a good chance that we could see 6% mortgage rates coming in the near future. This is not going to happen while the Fed still has both hands in the pot but it could happen when the Fed stops buying up Treasuries.
With this in mind, if mortgage rates are going to hit all time lows it is going to have to happen in October. This is not to say that mortgage rates will not stay at low levels but all time lows will be out of the question without the Fed’s assistance buying treasuries. The Fed is goign to continue to buy mortgage backed securities until March 2010 but after that who knows where mortgage interest rates will go.
Please make sure to return to Subprime Blogger for all your mortgage and financial news. To stay up to date on the current state of finances make sure to bookmark the current news category below. We offer information on everything from getting a lower mortgage rate to increasing your credit score.
Author: Alan Lake
Comments
Leave a Reply