Mortgage Rates, Views You Can Use

Will Home Loan Rates Go Back Down to Lows of 2010

January 11, 2011 by · Leave a Comment 

Business Discussion by Andrew Johnson | iStockphoto.comEver since the announcement of Quantitative Easing 2 in late November of 2010, mortgage rates have been on a quick climb higher. This has unfortunately prevented many homeowners from refinancing and homebuyers from buying real estate.

The number one question that has been debated amongst homebuyers, home sellers, real estate investors, Realtors and mortgage professionals alike has been the following:

QUESTION: Although home loan rates are still near historic lows, they have been heading up. So are those unbelievably low home loan rates behind us for good?

ANSWER: There are only a couple things that would bring back the historic home loan rates of 2010:

  1. If the Fed’s recent round of Quantitative Easing 2 falls on its face and doesn’t meet its mission of creating inflation, boosting Stock prices, lowering unemployment and creating consumer demand, then Bond prices could make some gains as the threat of deflation reemerges. But this is a long shot. As the saying goes: “Don’t fight the Fed” – which means that if the Fed wants to raise inflation, it most likely will.
  2. If the financial problems in Europe that we saw in 2010 worsen significantly in 2011, then this could drive investors into the safe haven of the U.S. Bond market, which would help mortgage bonds.

Realistically, the chances of these events happening are unlikely. And when you consider the stimulative action of extending the tax rates and adding further cuts, it’s tough to see mortgage bonds or home loan rates improving much.

So the bottom line is that home loan rates may see a brief and fleeting improvement here or there, but many experts including myself believe that the overall trend will continue – meaning home loan rates will creep up as we progress through 2011.

The good news is that home loan rates are still extremely attractive and are still near historic lows for now. That may not be the case in the coming weeks and months. If you or someone you know has been thinking about purchasing or refinancing a home, NOW is the time to call or text me at 512-522-7284.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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