Current Mortgage Rates Set to Rocket?

Posted by  on Apr 08, 2010

Today's mortgage rates aren't just low. They're ultra-low. And they're artificially low.

In fact, they're a result of government interventions in the mortgage market. And many observers believe that the Federal Reserve cannot continue to prop up that market--through its support for Freddie Mac, and Fannie Mae--indefinitely.

How Much Will Mortgage Rates Rise?

Nobody knows for sure by how much mortgage, and refinance rates will rise when the Fed finally has to pull the plug. But Freddie Mac's deputy chief economist, Amy Crews Cutts, told the Washington Post in late December:

...interest rates are bound to rise to 6 percent by the end of 2010 because private buyers will demand a higher rate of return on the securities than the Fed did. Lenders may have to raise the rates they charge to consumers in order to make that happen. Extraordinary resources have been put into keeping the rates down and supporting the mortgage markets and it's hard to imagine that the rates can go much lower than they are. Anything we get at or below 5 percent is a gift at this point.

Morgan Stanley thinks the lowest mortgage rates by the end of 2010 could be 7.5 percent... or even eight percent. Bloomberg News reported:

Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.

Act Now for the Best Mortgage Rates

It was only very recently that mortgage loan rates looked set to remain low for some time. But suddenly it's become difficult to find any economist predicting anything other than rises.

So now is the time to buy a home, or refinance, and to lock your mortgage into a rate as close to five percent as you can get. Compare the lowest mortgage rates now.


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