We all keep hearing that mortgage rates are going to increase over and over, but they are still low. Are they really going to increase? The simple answer is yes.
The Fed has committed to purchasing mortgage bonds through March 31, 2010. They have already slowed their purchasing. It has even been estimated that the Fed is purchasing nearly 75% of the mortgage bonds. If they are not purchasing bonds, the rates will be higher even if other players step up their buying. There is not much hope of the Fed extending the mortgage bond purchasing program. They have specifically stated that they will not be extending the program.
With short term rates being so low, it is easy for large institutions to borrow low and then invest in mortgage bonds and make money on the interest rate spread. If short term rates start to increase, this will diminish mortgage ...
