Mortgage Rates Going UP!?!
Are you conflicted, unclear as to the direction mortgage interest rates will take? Do you wonder if Greenspan’s conundrum will continue?
Frankly, your guess may be as good as those who routinely predict these things. I’ve seen opinions indicating rates are going to skyrocket upwards to those believing bond yields will send them even lower. Overall, my best guess is mortgage rates will continue to remain reasonably stable. Why? A number of reasons.
As financial markets anticipated a higher level of economic growth, 30 and 15 year fixed rates rose during the past two weeks. Essentially, 30 year rates rose from 5.62% to 5.66% while 15 year rates went from 5.20% to 5.25%. Still, those rates are almost a half point lower than the average rates of a year ago.
The gearing up for greater growth in the economy may have been, ultimately, somewhat premature, as the softer-than-expected inflation rate report failed to boost the market.
“A further rise [in fuel prices] could cut materially into private spending and thus dampen the rate of economic expansion,” said Greenspan.
With crude oil prices averaging around $60 a barrel and showing no signs of decreasing, higher gas prices will continue to strain the budgets of both businesses and individuals. The effect is overall higher costs on all products and services which could prevent further expansion and growth in some areas of the economy.
Greenspan also said that low long-term interest rates have “continued to provide a lift to housing activity.”
During the past several years, one of the strongest areas of economic growth in this country surrounded the housing market. Low rates and flexible loan program options gave many Americans their first opportunity to buy homes. Homeownership provides a foundation for a stronger, more stable economy.
With this in mind, I believe that interest rates dropping to new record lows is unlikely, at the same time, I also feel that even as the market improves and the economy continues to stabilize, long-term rates for mortgages will remain steady and affordable.