2022 Boise Idaho Real Estate Blog

Mortgage Rates Won't Stay Low For Long

Main Boise Home Loans

Here are three factors you need to know about regarding why mortgage rates can't stay this low much longer...

If you're a homeowner that is considering a refinance, then It's probably the question at the front of your mind...how low can mortgage rates go? The short answer...they can't go much lower.

Here are the top three reasons you need to know about why mortgage rates won't stay low for long:

The End of the Fed Purchase Program is Near. The Fed has already announced that, by March of 2010, they will stop buying mortgage-backed securities. The Fed has created an artificial demand for these securities by buying them at the pace they have. This demand has helped to create the lowest mortgage rates on record. When the Fed exits this purchase program, this lower demand will force mortgage rates to move up.

Rates are Artificially Low and Can't Really Go Lower. This is due to the excess demand from the Fed Purchase Progam that I just described above. I remember when customers told me they were "waiting to refinance until 30-year mortgage rates got to under 4.00%." That never happened, and never will.

Inflation Will Come in the Future. The thing to remember about inflation is that it erodes the future value of fixed-rate return instruments, like bonds. When investors begin to sell off bonds due to fears of inflation, our rates will undoubtedly go up. Inflation will be coming in the next 6-24 months...it is a matter of when not if.

Posted by Eric Leigh at 10/7/2009 3:20:00 PM

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