Will interest rates go up in 2011
As we well know that for quite some time now the mortgage rate have been extremely low. Our nations never saw mortgage rate extremely low like this for decades. This has caused as many people do refinance to save their money. The problem therein lies in the fact that these rates are a product of the week economy. The economy was set into a landslide when the housing market bubble burst into pieces the last 2 years. However, there are many people cannot refinance their home because they did not have enough home equity to fulfill the loan to value or LTV requirements for a mortgage.
Quite a pickle… right? Right.
In other side of the mortgage perspective people that are looking to buy a home are in a screaming good position. When the house prices in the housing market are low so the mortgage rate will be at the floor and there are many of house on the market prepare to sell. For many home buyer and home owners in these economically difficult times low mortgage rates have been a life line.
But are the low mortgage rates going to end?
That is an outstanding question. Will it be held the end of 2010? Or Will in 2011 the mortgage rate stay low? There are two large factors to see to help determine if and /or when mortgage rates may head back up high like before.
The Mid Term Elections:
Usually mortgage rate is affected by the big election. Well, perhaps not directly but the elections significantly affect consumer confidence because the economy will eventually trickle down to mortgage rates. Before the election rates are not change more but we could see some will changes or movement in mortgage rate if there is a changing of power. In Washington a big change tends either build consumer confidence. Furthermore, both of it will have an effect on the economy and ultimately on Mortgage Rates.
How does the Economy Affect Rates?
Credit cards and auto loans are types or short term loan and typically these loans are directly affected by the feds lower or raising of the prime interest rate. To maintain the stability of the nation’s financial system the Federal Reserve will move the short term rates up and down. But these moves just directly affect short term loan, for the long term loan these changes are not affect directly because the prime rate in short term loan is an indicator of the strength of the economy. Even though not all the case, mortgage rate is often follow the prime rate either up or down. Therefore we can see the prime rate increase if there is an economic up term in 2011. This is can be a sign too to see that the economy will be better and the mortgage rate may be soon to follow.
Then, we may not see a strengthening economy for some time, so these rates can be a little while longer.
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May 18th, 2011 at 7:38 pm
Honestly i don!t see interest rates rising this year. with the economy still very fragil, with many more fore closures comming this summer,gas prices up, food prices up. people are hurting. my gut tells me interest rates are falling or staying about the same. Any increase in the interest rates would crush an already shakey economy