After a incorporate of months of steady fixed interest rates increases, the mortgage rates moved down again. Just a few months ago, a 30-year fixed mortgage rates shoot up to over 5.00% on great than incredible economic news. Now the cheaper seems falter again and the rates went south. Essentially, the connection between the cheaper and the interest rates is one which can be described as love and hate relationship. The great the cheaper the worse the interest rates and vice versa.
The principle behind this idea is that when the cheaper is weak and not growing, ordinarily the inflation is low and the Federal keep Board (the U.S. Central Bank) tries to use its powers to keep the interest rates down to stimulate the economy. The opposite is true in case of strong economic growth, when the Fed tries to use its powers to move the rates up to forestall the inflation get out of control.
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Although it would be a stretch to call our current economic conditions as "strong," it is fair to say that the cheaper appears great than any time in the last incorporate of years. However, the cheaper is only one side of the "interest rate story." other leading issue at play is investors' question (buying appetite) for the U.S. Treasury bonds.
That question ultimately dictates the yield (rate of return) that the bond investors are willing to accept. With all new turmoil in the Middle East and the ongoing Greek debt saga, a lot of global institutional investors comprehend our national debt instruments (Treasury bonds) as relatively safe and dependable place to park their money. This strong question drives the interest rates down as the investors are willing to accept lower rate of return in exchange for perceived safety.
So, what does this have to do with the mortgage rates? Well, mortgage rates are tantalizing closely with the U.S. Treasury bond yields. They are not the same (mortgage rates are higher), but they tend to move in the same direction. At the time of this writing (July, 2011), a typical 30-year fixed mortgage rate is in the 4.5% - 4.875% range (4.75% - 5.125% Apr), which is still relatively close to the 50-year low of 2010.
What is the rate prediction for the future? As long as the U.S. cheaper is struggling and the investors are buying our national debt, the interest rates will probably remain quite low. However, as soon as economic growth and inflation picks up, the interest rates will go up. How much and how quickly? Only time will tell.
Mortgage Interest Rates Stay Low (At Least For Now) Calculate Mortgage Interest
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