WHY HAVE MORTGAGE INTEREST RATES JUMPED UP RECENTLY?
June 16th, 2009 categories: Buyer Strategies, Mortgage & Finance, Seller Strategies
In the past few weeks, mortgage rates have jumped by more than 1.125 percent. Why the upswing?
It is not a random happening.
One key factor is the perception, or should I say the anticipation, of inflation.
When movers and shakers in the bond investment world anticipate that the dollar will be less valuable due to inflationary pressures, we can expect that traders will sell their mortgage bond holdings. This drives down bond prices, which in turn drives up bond yields. This results is rising interest rates.
At least three factors are big regarding the anticipation of inflation:
- Job losses are slowing, adding to consumer spending expectations
- Gas prices have risen 41 days in a row
- The federal government has been cranking up the money printing press
No telling what interest rates will do next, but it is likely to be a bit volatile until there are more clear signals regarding the national economy’s direction. The American economy runs in cycles, so it will rebound. As far as your own personal mortgage interest rate decisions go, when you get a good rate be ready to “lock and load.” Rates may be jumping around for awhile. No need to drive yourself crazy trying to anticipate the unknowable.
