Interest Rates Move Up Again

Bond markets continue to react 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 . Many investors are concerned that this plan may 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 another quarter of a point the past few days and have moved up over a half point over the last several weeks since reaching historic lows.

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 conclusion to this week’s newsletter on interest rates from HSH Associates states: ” Despite this week’s rise, mortgage rates do seem to have leveled off. Barring any blockbuster economic data, there is a good chance that we have peaked, give or take a few basis points. If we have, and if history is any guide, we might see some slight improvement in rates over the next couple of weeks.”

The following are interest rate quotes from Al Hermann of American/California Financial Services ,

The following are interest rate quotes from Jan Schott Bank of America, Home Loans [email protected] 310-802-2300 :

Conforming 30/Yr Fixed to $417,000

4.675% @ .750/pt 4.875% @ 0/pts

Conforming 15/Yr

3.875% @ .750pt 4.250% @ 0/pts

Conforming High Balance 30/Yr Fixed to $729,750

4.750% @ .375/pt 5.000% @ 0/pts

Jumbo Fixed to $2,000,000

5.250% @ .875/pt 5.625% @ 0/pts

Jumbo 5-Year Fixed

4.000% @ .875/pt 4375% @ 0/pt

FHA Fixed to $729,750

4 .750% @ 0/pts

Rates based on a Single Family Residence Purchase with 20% down, FICO score of 740 or greater, 30/day pricing. FHA is based on Single Family Residence Purchase with 3.5% down payment,FICO score of 620, 30/day pricing. Points are for Rate only. StandardCosts apply. Rates not guaranteed and subject to change daily.