Where Are Mortgage Interest Rates Headed?

The questions I get asked the most concerns where interest rates are today and what direction are they headed. It been a tough couple of months to provide answers to these questions. Back in November the Federal Reserve (FED) announced that it would be buying Mortgage-Backed Securities (MBS). The effect was to move mortgage interest rates down. Rates moved on a downward path through early January, when despite the efforts of the FED they began to move up again. Despite predictions of lower rates this trend has continued into February. As of today the FED has purchased about $91 billion of the $500 billion allocated to buy MBS's.

So where are we headed? Some experts expect interest rates to move back down. William (Bill) Gross is a co-founder of The Pacific Investment Management Company, LLC (PIMCO), one of the worlds largest bond funds. PIMCO is one of the companies contracted to assist the FED's purchase of MBS's.

Bill Gross appeared today Monday February 9th on CNBC's Squawk Box. When asked about mortgage interest rates he said he felt they were going to head down again. To see a the full interview go to Bill Gross on Squawk Box 2.9.09.

Let's all hope Bill is right. Getting the housing industry moving in a positive direction is one of the first steps needed in turning the economy around.  It's going to be a very interesting couple of weeks. As the old saying goes "Hold on to your hats."

Call me with any questions you have concerning the current market.