As a mortgage professional its always important to stay abreast of what the market is doing, and where the interest rates are going. I feel that its our duty to inform the potential borrower honestly. To help me do this I have found a good resource. This article below is posted at http://www.realestateabc.com/rates2.htm and included below for your convenience.

 

 

Interest Rate Report - April

Mortgage Rate News

During March, fixed mortgage rates remained remarkably steady, after about a 1/8th percent decline in February

Analysis

Iran needs money.

Since the Iranian government owns the oil companies in its country, having nationalized them back in 1951, what better way to get some extra cash than having the ability to charge more for oil?

Of course, you need a crisis.

Kidnap a bunch of British sailors and voila! Instant crisis. Oil prices were lower than $50 per barrel back in January and now they are about $66 per barrel, perhaps heading higher. Iran gets its money, honey.

Americans pay more for gasoline, of course -- and prices were already on their way up for eight straight weeks because summer driving season is coming soon and, as always, our refinery capacity is very tight.

It costs a LOT to fill up one of those big SUVs with Super. Heck, if you have one of those rice burner sports cars with maybe a 15-gallon capacity, it almost costs $50 to fill up the tank on that. Even if you DO get 30 miles to the gallon when driving sensibly.

Spending more money on gasoline means less money to spend on other stuff, and adds to inflation. Merchandise costs more, because LOTS of stuff gets made with petroleum products and consumers have less money to spend on it.

That could lead to a slower economy.

So Bernanke should lower short-term interest rates, right?

Well, if he does that, the value of the dollar goes down. Imports cost more. Higher costs means more inflation and perhaps a slower economy. Higher inflation also means higher interest rates.

So Bernanke won't do anything (we think).

The dollar may ALREADY be heading down, anyway, thanks to the new trade sanctions against China.

Plus, China owns a lot of U.S. Treasuries and if the dollar goes down in value, so do the value of those securities. If China ever sells a bunch of them at once, the dollar will go down even more. They don't want that and we don't want that, but it is a possibility.

What a complicated world we live in.

Interest Rate Future

Don't expect Bernanke to do anything with the Federal Funds rate. That will be seen as anti-inflationary by long-term interest rate experts. Couple that with a potential for a slowing economy and rates should continue to drift lower, though very very slowly.

Or remain about the same.

No guarantees, as always.

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