Mortgage Calculators Be Ready For Another Volatile Week

Many observers are wondering were are the current mortgage rates going. Today's mortgage rates are higher than we had hoped they would be.

The government agencies such as Federal Reserve, The Congress and the Treasury Department are probably perplexed. They put so much effort in bringing down the mortgage rates to fuel the housing market and the real estate, but as the mortgage interest rates came down the applications and the house loan refinancing rose up. This is good, but there are two considerations: mortgage rates started to move up and the fact that we still have too many foreclosures.

We have been noticing a lot of volatility in the mortgage interest rates in the recent two three weeks. As the rates come down, refinancing and mortgage applications go up, but then the rates go up too. As David White's writes in Seeking Alpha "The yield on the long bonds is rising. The 10 year note yield was 3.19% a month ago. It is 3.77% now. Other bonds have moved similarly. The mortgage rates have moved in virtual lockstep. The 30 yr fixed rate was down to 4.85% in April. Now it is at about 5.5% (last week 5.7%). The trend has definitely been upward lately. This does not help the real estate market. The supply of houses on the market temporarily went down, but this is likely only temporary. Plus the supply actually needs to go down much much more."

The second consideration is the number of foreclosures that the U.S. housing market has. We simply put still have too many foreclosures in this country.

We may be up for another bailout if the government does not find a way to stabilize the mortgage interest rates and thus positively influence the housing and real estate market.

Now, in this country there may be many people who can pay off their mortgage immediately. However, they are holding off because of the tax benefits that they can write off each year. What if the government gives good incentives to pay off the mortgage if you could do it without worrying about the tax implications?

How many current homeowners could take advantage of that pay off their mortgage without worrying of paying more taxes next year (as there won't be the mortgage interest payment to write off) and free huge sums of money for the U.S. banks. This would enable the banks to have more money for lending and would encourage more commercial and private lending to businesses and homeowners.