May 29 2009

Mortgage Rate Bumps Up Slightly

Published by at 8:09 am under General Information

This week we saw a slight increase in interest rate for new fixed-rate mortgages. And why is that?  Well it’s because the Gov’t. Bond market was down slightly.  Which means bond holders are now requiring a slightly greater interest return.  Many mortgages are tied to the Treasury Bond rate so mortgage rates increased slightly as well. 

So what are the interest rate signals to always be on the lookout for? 

1.  Any change in Fed. Discount Rate (the rate banks pay to borrow short-term from the government). 

2. Any change in Banks Prime Rate (the best rate offered by banks for short-term loans to prime borrowers).

3. Any change in the Bond Market (a drop in Treasury Bill market values results in an increase in new Bond, and new mortgage, interest rates).

Long-term mortgages are still running in the 5% range which is historically viewed as a great rate.  Jumbo mortgages (those over $417,000) should still be expected to run about 6% (one percent higher than the conforming loans under that $417,000 level). Consumer confidence, overall economy, government budget deficit and inflation all effect the interest rate outcome in one way or another.  

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