Are Home Mortgage Rates About to Rise?

Home mortgage rate cut

Last week about the Federal Reserve continuing its policy of keeping interest rates low to stimulate the economy. Also,  thirty-year fixed mortgage rates slipped below the five percent mark for the first time in nearly half a year, dipping to 4.9 percent and fifteen year fixed rates are just 4.4 percent. It looks like the low rates caused applications for new mortgages to jump by nearly 6 percent last week, according to the Mortgage Bankers Association.

According to the statement released by the Fed, in an effort to “provide support to mortgage lending and housing markets” they will “purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt.”  Additionally, “they expect to gradually slow the pace of these purchases in order to promote a smooth transition.”

So just what does this mean for rates?  “In short – They are going to go up.  It’s simple supply and demand,” says Scott Messina, publisher of Mortgage Market Live.  “Just how fast remains to be seen, it really all depends on how fast the Fed turns off the spigot.”

This year in an effort to stimulate housing and the economy at large, the Fed began purchasing the oversupply of debt.  Without this “help” from the Fed, rates would have been forced higher to attract more investors.  Instead the Fed has been quietly buying this oversupply to keep rates artificially low.

“The problem of course, is once this helping hand is pulled back, rates have no where to go but up.” added Messina.

With mortgage rates this low, and the current good buyer’s market here in San Diego, now may be an excellent time to consider purchasing a home.

Sorrento Valley real estate