Jan

28

Where Do Mortgage Rates Want To Go?

Filed Under Buyers, Sellers, Sellers & Buyers |


Share

It’s no secret that mortgage rates are low right now. Just about every buyer I talk to knows that rates are low. But it seems that most are not aware that they are historically low. I think many people, especially Long Island homeowners, firmly believe in the saying, “What goes up…must come down”.
Well for the interest rates, maybe buyers should be watchful for the opposite when it comes to the interest rates.
buyers-mortgage-increases.JPG
This slide shows us that the trend during the last year, was for interest rates to be quite volatile. Whereas in the past, mortgage rates generally rose over a three month period, during 2008, rates were jumping up over a point in just 5 weeks. And even now, from week to week, it seems on a Monday, the rates spike to 5.4%, then slowly go back down.

My question is, what happens if the rates don’t go back down? Now I’ve gone over the whole “it costs a lot more for a mortgage at 7% than it does at 5%” thing and I’m not doing it here again.

buyers-mortgage-trend.JPG
Now this graph is probably the most interesting you’re going to get on the internet…anywhere! Statistics was never my bag, but when you look at them and step back, you really can see the big picture. Rates in 2008 were going up. And they went up until the government stepped in, for better or for worse, and implemented a “bail out” of Fannie and Freddie Mac.

Then shortly thereafter, as mortgage rates went up rather swiftly, the gigantic bail out occured and rates went back down. So where does that leave us?

With another “bail out” of sorts coming, in the form of a “stimulus” package from the federal government, it appears like for now, the rates will remain low. However, inflation is something that does not mold well for low mortgage interest rates. And there’s not a whole lot the government can do to change the natural course of the financial markets.

Without government intervention, at least from where I’m sitting and writing this article, it sure seems like rates want to go…up.

(c) Copyright, 2009 www.tommcgiveron.com


Comments

Name (required)

Email (required)

Website

Speak your mind

1 Comment so far

  1. Long Island Real Estate Market | Tom McGiveron | Coldwell Banker Realtors on May 3, 2009 6:28 pm

    […] One thing is for sure, and it’s that right now, interest rates are at an all-time low and I’ve written extensively on mortgage interest rates. Even with a fantastic 1st time home buyer tax credit (dollar for dollar credit - ask your cpa), […]