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Where should the rate go?
September 23rd, 2009 8:15 AM

Personally, I think the rate will stay at this low level till summer of 2010. Fed will extend the purchase of MBS this fall and the interest rate will stay low until the real sign of economy recovery.

We will not have a good holiday sale with this high unemployment rate. The unemployment is 12.2% In California, the world's 8th economy. The recovery will have a long way to go. The best option for the Fed is wait and see. If the economy stay at this level, the interest rate will be at this level; if the holiday sale, the unemployment rate(or job market) is worse than expected, then we will see the new lows of the interest rates.

For most of us, though we like the low interest rates, we still hope the economy is not going worse.

Posted in:General
Posted by Eric Fang on September 23rd, 2009 8:15 AMPost a Comment

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How do you explain the rally in stock market. The rates are related to bond which related to the stock mkt. So if stock mkt keeps raising, the bond mkt is gonna fall, which makes the rate goes up.

Posted by Clark on September 24th, 2009 8:17 PM
The interest rate is more closely related to the MBS(Mortgage Backed Security). The US government's continuous purchase of MBS will help support the mortgage rate at history low level. Once the Fed stops the purchase, the rate will go a little bit higher. Some others may think the rate will go much higher after summer 2010, I think the rate will still trade in a range, even it's higher, maybe less than 0.5% of the current level.

Posted by Eric Fang on September 24th, 2009 11:24 PM
Is government has the plan to continue buying MBS or that's an assumption? Where can I get some info on MBS related news? Thanks a lot!

Posted by Clark on October 5th, 2009 10:41 PM



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