Mortgage interest rates are one of the key determinants of how the mortgage market is performing. As rates decline, demand for homes should increase. This time, mortgage rates are declining with or without the demand.
Bond Rates and your Mortgage Interest Rates
Bond rates set your mortgage rates for fixed interest rates. As bond yields decline, so does the mortgage interest rates. Today, because of quantitative easing, bond rates are at levels that have never been seen before. The rates that bonds are at currently are so low, that this causes unheard, low mortgage interest rates.
Why are bond rates so low?
Bond rates are very low because of the American economy. The united states have still not improved demand for housing, so they need to improve the incentives for buyers. Low borrowing rates are an attempt to stimulate the economy to increase the speed at which it recovers. With house prices being a primary concern, it is important that bond rates stay low.
Will these tactics work to bring demand back? Will house prices regain some leverage? Only time will tell if these things work. As for now, we can enjoy low house prices for the unknown future.
When do you think interest rates will go back up? What do you think of the economy? Leave your response in the comments below.
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