Current Mortgage Rates To Rise 1% If Programs Ended

Hooper told Bloomberg in New York, that Federal Reserve's head Ben Bernanke and his colleagues may spend this week to discussing ways of how to conclude the purchasing of mortgage backed securities as the government considers ending support for the source of the problem that started this global financial and economic crisis. On the other hand, how long do you support a program like that? When is the point where you leave the economy to grow and develop naturally, without any stimulus?

Fed's buying mortgage backed securities and government's $8,000 dollar first time home buyer tax credit program has helped not only to keep the current mortgage rates at historic low levels, but also increased the housing sales. In July the housing market rebounded, sales rising to 9.6 percent higher than the previous month. By the way, it's the highest rise since 2005.

The first time home buyer program gives 8,000 dollar tax credit to people encouraging them to buy their first house. It is set to expire on November 30th. However, some are calling to extend it not only beyond 2009, but also increase it to 15,000 dollar to encourage more people to buy houses. While this is a great program, again, the question is, how long to you artificially stimulate the economy? We are not against it, but the question is when is the time for the natural growth?

Fed is considering to wind down the purchase of the mortgage backed securities: a program that has kept the current mortgage rates at historically record low levels. However, critics say it will depress the housing sales and if stopped abruptly with the tax credit program will increase the mortgage loan rates from half to one percent by year end. The Fed is scheduled to buy up to $1.25 trillion of mortgage-backed securities and $200 billion of agency debt by the end of the year. Only $862 billion is bought so far.

Today's average mortgage rates are in the range of 4.98 nationally. Currently according to Zillow marketplace graph the 30-year fixed rate is at 4.98 percent. The 15-yr fixed rate is 4.33 and the 8/1 ARM is at 3.89.

Written by Armen Hareyan
Hickory, NC
Publisher of HULIQ