Interest Rates on the Rise

Well, its finally happened. The bond market has accepted the Federal Reserve is not going to be decreasing interest rates any time soon. Up until last Tuesday's hawkish inflation comments from Fed Chief Bernanke, the market had spent the first part of this year believing the Fed's next move would be downward. But, not anymore. In the span of less than 14 days, we have risen from a 10-Year Treasury yield of 4.84% to 5.15% on Friday morning. Mortgage Backed Securities followed suit and thus interest rates on 30 year mortgages were up to 6.75%. It would not be surprising if we hit the dreaded 7% level in short order.

Now we know people like to say "were still at historically good rate levels", but that is just so much hot air. Housing sales are in the tank in many areas and this upward spike in rates is not going to help one bit. In an already tough environment where buyers want to get an unbelievable deal and sellers are still stuck thinking its 2005, a rise in rates above the 7% level will make things even worse. It will take another whole segment of potential purchasers out of the marketplace as they won't be able to qualify for a home loan.

So, hang on to your hats ladies and gentleman. A change in the slumping housing sector just got pushed even further into the future.

For more information on current interest rates or any mortgage related questions, please contact us at Metro Mortgage Company.

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