Current mortgage rate trends have been down to sideways lately but that could all change with a quick move up in the 10 year treasury rate. Mortgage interest rates have been hovering around 5.1% to 5.2% for about a week now and that is likely to change in the near future. It seems that the 10 year yield is breaking down which means that 30 year mortgage rates are likely to head lower but there is always the chance of a steep increase because of interest rates being held lower by the government.
President Obama and his staff have done everything in their power to keep interest rates low and that has not changed since his administration started. The Federal Reserve Bank stated that they are going to stop buying US Treasuries by the end of September so this may change things a little bit as far as mortgage rate trends. If the Fed stops buying treasuries, we are likely to see a move up in the treasury yield which would increase mortgage rates.
That being said, the Fed has bought so many treasuries that it might not matter if they stop buying them. It will be quite the interesting scenario at the end of September. We could either see mortgage rates drop well below 5% or we could see average mortgage rates shoot well above 6%; or anything in between could happen.
In an era of bad credit home loans, one would think that mortgage rates would move up because borrowers are more at risk and mortgage lenders would penalize them. Luckily, President Obama has realized that high mortgage rates would only hurt the economy so he is doing what it takes to keep all mortgage and interest rates near all time lows. The issue at hand is the fact that we might see a whip lash effect when the market starts setting interest rates.
If you have been thinking about refinancing or getting your first mortgage, now is as good of a time as any. With mortgage interest rates near all time lows, now would be a great time to get out there and get your mortgage application submitted. You do not want to wait and see mortgage rates go above 6%.
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