Whispers from the Fed indicate a change in interest rates is likely to come in the coming months. Although chairman Bernanke promised that only interest on short term loans to banks will be raised, however the new measure will no doubt provide a domino effect to the rest of the banking sector. Mortgage rates will be one such casualty. At present, the Fed’s bailout of mortgage giants Fannie and Freddie have kept mortgage rates at artificially low levels.
Analysts at the Mortgage Banker’s Association (MBA) speculate that between the time the Fed stops buying mortgage backed securities at the end of March, and the beginning of June, mortgage rates will rise by half a percentage point. This is considered to a rather conservative estimate.
Once the Fed gets out of the mortgage business, the buying of those securities will be left to private investors who have thus far proved less than willing to do so. Mortgages, of course, were one of the primary causes of the financial meltdown. Private investors do not want to take on the risk again, and will most likely ask for higher interest rates.
Today’s Mortgage Rates
The benchmark Freddie Mac mortgage interest rate has remained steady at an average of 4.93 percent according to reports this morning. This is near record lows. According to Bankrate.com, the average for the benchmark 30-year fixed-rate mortgage is currently at 5.16 percent. The 15-year fixed-rate interest average is 4.53 percent up from last week’s 4.43 percent; and the 5/1ARM is at 4.07 percent also up from 4.06 percent Friday.
Most experts say that this is prime time to seize low mortgage interest rates. Americans looking to buy homes should not only consider housing prices, but also mortgage rates. Many lenders are still offering low rates, and depending on credit score, a rate below 5 percent can be had.
Written by Lani Shadduck
HULIQ.com
Source:bankrate.com;subprimeblogger.com
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