Mortgage rates are historically low – under 5% for a conventional loan. Why you ask are they so low? The US Government is “subsidizing” our need for low interest rates to help boost our anemic economy. Once the economy starts to blush again, economists start to worry about inflation, so they want to stave that off by raising interest rates again. How is the government subsidizing our mortgage rates – they have been buying mortgage backed securities for quite a while now – no one else wants them; they have purchased over $1 Trillion already. This is what has been keeping interest rates low. March 31st is the next meeting of the Federal Reserve and this will give us a good direction for where interest rates will go. If they decide to stop buying mortgage backed securities, then we will see a rise in interest rates. The overall idea is to get the securities market going again for outside investors and the way to do that is to raise the interest rates to make it more attractive to these investors. Low interest rates as much as we all want that is not really a good thing. Low interest rates are tied to bad economic news – higher interest rates are typically associated with good economic news. If unemployment stays high, we may see more of our low rates. Only time will tell. The overall outlook however is that interest rates are due to rise. If you are planning on buying a home or refinancing, now or in the near future may be the time to pull the trigger.
Here’s a great article on the above topic – click here.
