Interest Rates Bump Up Over Last week

Last week, the bond markets reacted very negatively to the Federal Reserve’s plan to purchase up to $600 Billion of Treasury Securities on the open market ( referred to as Quantitative Easing or “QE2”) intending to try and keep interest rates low. The Fed would accomplish this by literally printing money and using it to purchase government securities hoping to lower the interest rate yields on these benchmark securites by increasing demand for these securities, thus raising their price and therefore decreasing their interest rate yield . This large increase in the money supply in the U.S. economy. however, led many investors to be concerned that this plan would lead to a rapid return of inflation, and therefre investors insisted on higher yields for long term bonds, thus increasing interest rates on mortgages. Rates thusly moved up abut a quarter of a point over the last week.

It remains to be seen if the Federal Reserve’s plan will have it’s intended effect on interest rates, and the direction of mortgage rates in the near future is uncertain.

The following are interest rate quotes from Al Hermann of American/California Financial Services , Loan Interest Rates continue at Unbelievably low rates.

Mortgage rates still are extremely low, and now may be the best time in the foreseeable future to lock in these historically low rates by either refinancing or buying a home.