Home Mortgage Loan Rates – All Time Low Interest Rates Coming?
Posted on | October 23, 2009 | 1 Comment
Home mortgage loan rates have been between 5% and 5.5% since the end of June. Prior to that we saw mortgage rates very close to all time lows in March and April. Now that the government has created another mortgage plan to help keep mortgage interest rates low are we going to see all time lows again in the very near future.
The Federal Reserve Bank made the announcement that they are going to conclude their US Treasuries purchase program at the end of October. When this happens it is likely that we are going to see treasury yields move higher which in turn would move mortgage rates higher as well. During the summer we saw treasury yields moving up and that kept mortgage rates above 5%.
As soon as treasury yields started to increase in the month of October, after the announcement, President Obama and his administration have come up with a new mortgage plan aided to help low to middle income families. A major part of the plan is to keep mortgage rates very low so the amount home buyers pay on the interest of their home loan does not dip into other bills that must be paid.
The specifics of how the government is going to keep mortgage interest rates low has yet to be announced. In the meantime mortgage rates continue to be around 5% because the Federal Reserve Bank continues to buy mortgage backed securities. They have extended the end date of this program from December 2009 to March 2010.
As long as the Fed continues to buy up mortgage backed securities then we are likely to see relatively low mortgage rates. If treasury yields increase because the Fed is no longer buying US Treasuries then it is going to be very interesting to see what mortgage rates do. If rates start to move up there is a good chance that the Fed is going to have to increase the purchases of mortgage backed securities to keep rates near all time lows.
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Author: Jesse Wojdylo
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October 23rd, 2009 @ 10:27 pm
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