Current Mortgage Interest Rates

Current Mortgage Interest Rates

Starting in 2008 the Great recession has been a boon for lowest current mortgage interest rates. All type of asset classes have been depressed and primarily the real estate market. Stocks, bonds and real estate have all taken a hit. But this kind of economic environment has created an interesting scenario for current mortgage interest rates.

Federal Lending Policy for Mortgage Rates

While many people are losing homes to foreclosures there has never been a better time for refinancing or purchasing a home in this market. The Federal Reserve has intervened in the market place by lowering their lending rates to zero to .25 percent. These are the rates Feds charge to lending institutions. In addition they have instituted a mortgage investing program where they buy mortgage paper and inject liquidity in the economy. As a result 600 billion was injected in 2011 and it trickled down in the economy. This causes the mortgage interest rates to trend lower and in to historic lows.

Feds rate policy has been uniform to all types of lending. This is to keep the real estate market constantly primed to get bid up and to shore up the economy. These rates are now at 50 year lows and they are constantly falling. The Feds are committed to keep long term interest rates low at least until 2013 and may be beyond that time period.

US economy and Credit downgrade

Since US credit downgrade was handed down by S&P in late August, investors are still drawn to US treasuries and mortgage backed securities and bonds which in turn lowers the mortgage interest rates. The US credit downgrade was specifically due a dysfunctional Congress and in the fighting on the issues of national deficit, which has ballooned to $14 trillion dollars. The credit woes and US economic situation has helped lowered these rates further.

The normal scenario would be to see these low mortgage interest rates to spike higher but that may not happen till the end of 2012 election year. The Feds are overseeing a rate policy which is going to ultimately generate a proper real estate and mortgage markets. The monthly job reports and unemployment rates also determine these policies. When the economy is stabilized or improving these policies will be unwind ed and mortgage rates will return to the norm.

Current Mortgage Interest rates

Despite the credit woes and a US economic conditions, current rates have proven to be a bonanza to bargain hunters and have ensued a refinancing spree. Many savvy buyers with larger down payment have purchased bargain properties and added to the portfolios.

Many international buyers who are earning in a different economy have also invested in US real estate market. The activity is there but at levels that is not enough to energized a full blown market recovery.

If you were the person who has maintained good credit and or have saved up cash, you can get a mortgage refinancing done at extremely good rates. Same goes for the purchasers who can come up with enough down payment required by lenders and buy properties at 60 percent to 70 percent of values prior to 2006. If so than it is a great time to unload those expensive lender loans and lower your payments and wait for the markets to recover.

Conclusion

There is one trend which has always been true. Real estate markets always come back and they feed off pent up demand and frustrations of the buyers who get sidelined, and when they do so as in the past, the mortgage rates always go up and so does the values of the properties and that creates a new cycle.

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