Mortgage Rates to Increase?

Denver Real EstateEveryone agrees, the historically low mortgage interest rates we are enjoying have been caused by Ben Bernanke and the FED using federal tax dollars to buy up Mortgage Backed Securities. The market is NOT driving these rates and it certainly will not go on forever.

My guess is that at some point in the next 12-18 months the FED will certainly slow down, and maybe cease buying the Mortgage Backed Securities. The ripple effect will be higher mortgage rates in the near future. In addition, the low inventory and price appreciation we are currently seeing, will cause lenders to reduce the amount that buyers can be qualified for.

Here is a quote from Rob Chrisman

The Fed giveth, and the Fed taketh away. Both stocks and bonds fell on Wednesday after a Q&A session with Ben Bernanke, and minutes from the latest U.S. Federal Reserve meeting, shed some uncertainty on the schedule of QE3. We also had U.S. existing home sales move higher in April, +.6%, and so once again we have numbers showing a continued improvement in the housing market. Even though sales have likely been restrained by limited available inventory in recent months, the pace of sales reported for April was the strongest of the expansion to date (excluding the home buyer tax credit periods). The sales mix has also become healthier lately with distressed sales accounting for only 18% of the market in April, down from an average of 23% in 1Q and 28% in April 2012. The median price of an existing home sale increased 11.0% over last year.”

This is not the time to panic, it’s the time to prepare!  If you’re thinking of making a move in the near future, contact me ASAP to discuss!
Photo Credit: Creative Commons License woodleywonderworks via Compfight
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