Blog with MAE Capital

Will Interest Rates Go Down?

June 25th, 2013 11:07 AM by Gregg Mower

A very good question in todays environment.  We know why rates have risen so maybe if we look at those factors we can deduce that if those factors turn around rates might go back down.  So the first and biggest reason rates have risen is due to the fact the Federal Reserve Chairman Ben Bernanke came out a couple of weeks ago and said that the Federal Reserve (the Fed) would slow down buying Mortgage Backed Securities through the Quantitative Easing Program QE3.  The markets had been watching the unemployment number to get down to 6.5% as was stated earlier in the year as a benchmark for the Fed to start to slow down the purchases of MBSs.  So this shocked the markets, then shortly after that announcement President Obama stated that he would not re-appoint the Chairman after his term was up the end of this year.  This sent the markets into turmoil as markets like to know how monetary policy is going to be and under Bernanke the markets know pretty much what they are going to get.  So this uncertainty in the markets are causing the rates to rise.

So will we see a lowering of rates?  I would say not in the near future as the markets are uncertain and the Fed is slowing its purchase of MBS which creates pressures for rates to rise.  So if you are considering purchasing a home or refinancing you should get it done while the rates are still low.  Now my prediction is not for rates to march up to 10% but level off somewhere in the mid 5's for a time.  If there is any signs of inflation at those interest rate levels then they will rise again.  So in the short term lock your loan in as soon as you can to preserve the rate level in todays world.  Locking in your rate is as simple as asking your Loan officer to do it for you.  He/She will need some things from you before they can lock your loan so be prepared to present all your documents in order to get a lock, and some lenders will want you to have an appraisal done before you lock the loan.  Be patient one good by product of rising rates will be that underwriting should loosen up a bit.

Posted in:General
Posted by Gregg Mower on June 25th, 2013 11:07 AM

Archives:

My Favorite Blogs:

Sites That Link to This Blog: