13 December 2010

The 411 on Today's Interest Rates...

Bonds and home loan rates took a hit again last week, and that leaves many asking: Will home loan rates go back down?

Below are 5 points that will help explain the current situation...and what we can predict based on the information we have today:

1) Home loan rates are near historic lows...for now.

2) That said, rates have been headed up recently…and indications are that those unbelievably low home loan rates may be behind us.

3) Looking at the big picture, there are only a few things that would bring back the lows that we saw in early November:
•If the tax cut package doesn't get passed. This would be bad news for the economy and Stock market, but it would help interest rates.
•If the Fed’s recent round of Quantitative Easing falls on its face and doesn't meet its mission of creating inflation, boosting Stock prices, lowering unemployment and creating consumer demand. This is a long shot, but if it happened, Bond prices could make some gains as the threat of deflation reemerges. 
•If the financial problems in Europe worsen significantly. This would drive investors into the safe haven of the US Bond market – and, therefore, it could help Bond prices, but probably only modestly.
4) Realistically, the chances of those events happening are unlikely. In the end, rates may see some fleeting improvements, but will likely continue to creep up over time.

5) Please allow me to reiterate: Home loan rates are still near historic lows...FOR NOW. That means, now is the time to act, and get locked in if you've not done so already.

This information is from my friend Leo Espino at Resource Lenders.  He is a wealth of information and a very knowledgeable "Resource" :-)  If you are interested in learning more, or getting in touch with him, I would be happy to help...just let me know!

Thank you,

Katy Perry photo via gettyimages.com

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