Mortgage Interest Rrates

Rates – will continue to remain at or near all time lows as managed and disclosed by the Fed!


- rationale for low rates is still there and given the lack of significant employment growth and the continuing issues in Europe this only adds to the continued confidence in low rates

- Based on what the Fed said they will hold rates at or near 0% thru 2015

- Fed purchase of $40b in MBS per month with no end mentioned - The Fed is unwilling to let rates rise until it is very clear the housing market is on its way to a real recovery – refinances also help to put more cash in consumer’s pockets

- Bond market is a safe haven - Better investment alternative than other government’s bonds

- Banks continue to hoard Treasuries in anticipation of rules that will raise the amount of liquid assets they are required to hold – tied to Basel III

It is clear to me however, the Fed can raise the rate a point and they can still consider the rate has being a low rate. This would raise mortgage interest rates. In the short term, this will move buyers off the fence and will buy. In the longer term, unless there is sustained growth, this move will dampen but not kill the recovery. This period in our history is critical for the next moves in our economic future will either make us again or break us for generations. I am not sure if the next President will have much influence on the economic picture in the short term. The answer for the future will be which path we select.