Interest Rates for Home Loans are changing


What happen last week to home loan interest rates?

With all of the spending the federal government is doing to stimulate the U.S. economy it has to pay for it through selling treasury bills to raise cash.  Along with the sale of treasury bills, an increase in mortgage back securities is hitting the secondary market which has created an over-supply of new bonds in the market.  This drives the prices of bonds lower and interest rates higher.  In addition to this over supply of bond money some not so worse than expected economic numbers have given hope to investors and have spurred a rally in the stock market thus fewer dollars being invested in the safer bonds and more dollars are invested in the riskier equities market.

Ouch…the reality is that where the 30 year fixed rate was around 4.75% a week ago is now more around 5.375% and it is not likely that we will see these rates come back down anytime soon.  Don’t get me wrong rates are still historically low, but what this shows us is that low low rates are not going to be here forever and those consumers that are looking for the lowest rates before they commit will ultimately lose out.

What a roller coaster ride it has been; if you want a more in-depth look at last week’s economic activity and how it impacted mortgage rates and more interesting facts you can go to my website at or click on MMG Weekly.

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