Mortgage Rates at One Year Highs

Mortgage rates spiked nearly a quarter of a percentage point this week on inflation fears, trouble with Fannie Mae and Freddie Mac, and overall bank weakness.

Mortgage rates spiked nearly a quarter of a percentage point this week on inflation fears, trouble with Fannie Mae and Freddie Mac, and overall bank weakness.  The rate on a 30 year mortgage hit 6.63%, its highest level since 6.68% in August of 2007.  On the face of it doesn't seem like rates have really risen much at all, but consider that the economy is weak and housing sales and prices are falling and anything that impacts affordability is a problem.

"Market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve will raise short-term rates this year all combined to push mortgage rates higher this week," said Frank Nothaft, Freddie Mac chief economist."

Mortgage rates have risen even while the Fed has cut short term rates.  That's because mortgage rates are being buffeted by:

I don't know if foreigners are pulling out of long term Treasuries and I'll have to research this a bit more.  But if they are then that would be an additional factor in the rise of longer-term rates.

Will long-term rates come down or stabilize?  If the price of oil drops below $100 as some are predicting and the Feds take steps to restart Fannie and Freddie its possible rates may stabilize or even come down.  But even at 6.63%, 30 year mortgage is still historically a very low rate.  It's just not as low as we've been accustomed to.

Sol Nasisi
Sol Nasisi: Sol Nasisi is the co-founder and a past president of BestCashCow, an online resource for comprehensive bank rate information. In this capacity, he closely followed rate trends for all savings-related and loan products and the impact of rate fluctuations on the economy. He specifically focused on how rates impact consumers' ability to borrow and save. He also has authored a wee

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