Mortgage Rate Trends – Interest Rates Head Lower Into August
Posted on | July 13, 2009 | No Comments
At the end of May and beginning of June I almost believed that the current downtrend in mortgage rates was broken. I can distinctly remember hearing Bob Pasini on CNBC say that mortgage rates were headed higher for quite some time. In the back of my mind Ben Bernanke’s face kept popping up. I could not help but think that the Federal Reserve Bank was NOT going to let mortgage rates go higher. For a short period of time I let the mainstream media convince me of the direction of mortgage rates; I learned my lesson.
As the little voice in the back of my head predicted, Ben Bernanke put the printing presses in full gear and continued to buy more US debt throughout last week. There is VERY little doubt in my mind the President Obama is urging Bernanke to make sure that mortgage rates stay well below 5.5%. This sounds like a great idea in the fact that it should spur interest in the housing market and get first time home buyers into the market.
The sad part is that this did not happen back in March when rates were well below 5% so why is it going to change now? For all of you who missed the opportunity to refinance back in March and April, I am extremely happy that mortgage rates are going down so now you can get that refi at interest rates under 5%. For the first time home buyer, I am happy for you as well. You have the chance to lock in on your first ever house at mortgage rates almost unheard of.
For those of you in high school and college, I feel VERY bad for you. By the time you get into the work force and make enough money to put the down payment on your first house inflation will be absolutely crazy. Interest rates will likely be in excess of 10% and it will cost $2.19 for a bottle of Mountain Dew. This is just the harsh reality of the government buying up its own debt. The Fed has already spent over $260 BILLION this year alone and they are looking to match that number in the second half of the year.
With all that being said, the mortgage rate trend remains DOWN! I am sorry that I let the mainstream media dictate my overall mindset on the market but I guess it happens to all of us. Until President Obama and Ben Bernanke see light at the end of the tunnel, we are going to continue to see the Fed do whatever it takes to push mortgage rates lower. How low will mortgage rates go? Low enough for the housing market to find a bottom; who knows where that will be!
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