Current mortgage rates are higher than just weeks and months ago. Actions taken by the Federal Reserve that started in the fourth quarter of last year helped push down mortgage rates during spring. The Fed's announcement to buy up mortgage-backed securities and long-term Treasury bonds helped keep these borrowing rates down, only to see them climb back quickly beginning in May.
There is hope, however, that mortgage rates will drop back down to rates the nation saw in March and April. In March borrowers could lock in rates on a 30-year FRM at a national average of 4.22%. For the first time in weeks these borrowing rates began to drop.
On Monday morning of this week rates for 30-year FRM's averaged 4.91%. By the afternoon borrowers could lock in those mortgage rates at 4.72%, on average. The continued drop of Treasury yields will likely help continue this trend for the short term.
The Federal Reserve is also worried about the recent rise in mortgage rates. It is the opinion of many financial and economic experts that stabilizing and improving the housing market is the key to improving the entire economy. Higher rates means less expendable income for homeowners, meaning less money being pumped into other sectors of the economy. Some homeowners considering refinancing to lower mortgage loan rates fear they missed the boat in April when lending rates began rising again.
The Feds could once again intervene as they did last year and pledge the purchase of more securities and bonds. This, however, would only be another temporary fix, just as the first quarter of 2009 proved. With increasing deficits yields on the benchmark 10-year Treasuries push higher, in turn, mortgage rates follow suit.
New jobless claims reports will be something else to watch concerning mortgage rates. An increase in claims would again indicate the slow state of the nation's economy, helping to push interest rates down. Recent rallies on Wall Street have also boosted hopes the economy was turning around and beginning to improve, another step always pushes interest rates higher.
Addressing rising deficits is key to Washington controlling rising mortgage rates. With health care reform and continued stimulus spending, dealing with deficits isn't likely at the top of the agenda for those in control in Washington. A poll released today by CBS and the New York Times indicates a majority of Americans believe dealing with deficits is more important than continued government spending in the economy. Mortgage rates will continue to be on the mind of many Americans as they look for every opportunity to save as much money as possible.
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