Hal's Mortgage Blog

The window of opportunity for low interest rates is slowly closing. Since November of 2008 the Federal Reserve has been buying mortgage-back securities in an attempt to keep mortgage rates low. It has worked! Experts say rates could easily be .5% higher today without the Government feeding $1.25 trillion into the market over that period of time.

 
Recently however, they have been winding down their purchases. In fact, as of April 1, 2010, they will cease buying mortgage bonds altogether. Remember the law of supply and demand from your economics class? Take the Government demand out of the equation and what happens? The bond market declines causing interest rates to go up.

 
How much they will increase is a guessing game, but don’t be surprised if rates are somewhere between 5.5% and 6% by the end of the year. To put that in terms for the average home buyer, .5% increase in interest rate means an increase in payment on a $100,000 home of roughly $30/mo.

 
If you would like more info on this, give me a call.