As of September 12th, rates are still hovering in the high 4% to mid 5% range for a 30 year fixed rate loan; 15 year fixed rate loans are still under 5%.  Fantastic rates, but will they stay low?  That is the million dollar question.

The reason mortgage rates have stayed in check is because the Federal Reserve has been able to purchase mortgage securities when they saw yields (rates) creepin gup.  Basically, they have been paying to keep the rates low.  This is the same idea as the "cash for clunkers" program.  It was announced last week that they are running out of funds for this project.  By October they will slowly start pulling out of the market.  What does this mean for rates?  No one really knows.  These are unprecedented times and there are so many factors it is hard to tell.

Folks that are not looking at rates daily can look to some signs to get an indication of where rates are heading:

  • If the stock market is really doing well then generally our rates will go up.  Stocks go up, rates go up.
  • If the economy starts really improving our rates will go up.  The economy heats up, rates heat up.
  • If inflation is going up, rates will go up.

For the most part the opposite is positive for rates.  So what is a prospective buyer to do?

I know is sounds cliche but don't miss the boat.  Remember rates had gotten as low as 4.5% on a 30 year fixed earlier this year.  The boat is shipping out.  Its a huge trillion dollar Titanic of a ship so I don't believe they will move quickly but just steady.  you just never know when we will run into a glacier!

Get out there, get pre approved and take advantage of this perfect storm.  There is extremely low rates and extremely low prices, don't miss out!  You will be happy you joined in with the rest of us.