All signs point to rising interest rates.  The inflationary fears have started to materialize and have affected the Bond markets.  Over the next few years, Trillions of dollars will be pumped into the economy, and many fear that this will cause hyperinflation.

Because interest rates are determined by the price and yield of Mortgage Backed Securities, when consumer confidence comes back, there will be a flight away from fixed income instruments, and towards equities or stocks.  In other words, money will stop flowing towards bonds, and will start moving towards other items that will more likely beat inflation. 

While bonds offer a fixed rate of return and are stable, in times of inflation, your rate of return may not be beating inflation.  When there is less demand, the price of the bond will go down, and the yield will go up; the yield is the interest rate.  Again, this means that interest rates are headed up.

What does this mean?

                Rates are still low; however, we know that they are heading up.  If you know ANYONE who is looking to purchase a home or Refinance their existing home, it is time to let them know that they need to act soon.  A rise in interest rates will mean decreased purchasing power and increased costs.  Rates are still relatively low, and prices are still low; it is still a great time to buy a home!

 
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4 Comments on Interest Rates are on the rise!

MAY
31
2009
230,587 Points 2 Featured Posts Outside Blog

It is inevitable that interest rates will be going up...let's just hope they aren't around the levels of the Carter administration!
7:07am • #1
223,644 Points Localism Sponsor

There is always a change in interest rates -  thanks for the info.
8:52am • #2
Outside Blog

Agreed, I too hope that we do not see the super high rates that were seen in the late 70's and early 80's.  In this global economy, rates like that would be catastrophic to the world economy.

 
1:09pm • #3
Outside Blog

James -

As someone who watches interest rates on a monthly, weekly, daily, and hourly basis, I understand that rates fluctuate.  However, the purpose of this blog was to let people know that I am not talking about a daily phenomena, but a trend of ongoing increasing rates.
1:12pm • #4


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Joe Harris

Melbourne, FL

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Morgan Financial

Address: 2720 N Harbor Blvd, Melbourne, Fl, 32935

Office Phone: (321) 757-3570 x 201

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As a Brevard County Mortgage Expert, Joe writes on all things related to the mortage industry and other related events for Brevard County, Fl.


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