Mortgage Rates Rising « FHA Home Loan Blog

FHA Home Loans are quickly becoming the best First Time Home Buyer Home Loan program available. FHA Mortgages offer low Mortgage Rates for home purchase or refinance. First Time Home Buyers can also take advantage of the $8000 First Time Home Buyer Tax Credit currently offered for anyone who hasn't owned a home for the past 3 years. If you currently have an FHA Home Loan, you can take advantage of the fast and easy FHA Streamline Refinance Loan to lower your payment today.

MORTGAGE RATES RISING

JUNE, 2009

Mortgage rates have climbed to the highest level we have seen since last fall.

Although still very low historically, people have gotten used to rates at 5% or even lower. Currently, rates sit in the mid-5%'s and it appears to be unlikely they will dip back down again to where they were.

The rise in rates seems to mainly be tied to the fact that there is too much supply of bonds in the marketplace. The government has essentially printed money by issuing a large volume of bonds to pay for all of the stimulus programs they have initiated.

Why is this bad for mortgage rates? Mortgages are backed by long-term bonds, so when there are too many of those bonds, it drives yields up, simple supply and demand. Higher yields result in higher mortgage rates.

There are other factors in play including signs that the economy is recovering, but further increases in mortgage rates could once again stagnate the housing market that is so vital for the recovery of the economy.

June 05, 2009 4:48

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