Interest Rates of 5% May Never Be Seen Again! Here’s Why.

Interest rates are speculated to begin heading in the opposite direction they have been come spring time.  As part of the economic plan to stimulate the market, The Federal Reserve has been purchasing mortgage-backed securities in order to manipulate demand.  Since early 2009, the Feds have bought an approximate $1.25 trillion worth of securities, and The Feds spending is set to expire on March, 31st.  Unlike the Tax Credit extension real estate professionals crossed their fingers for, the Feds have already slowed down on spending which suggests they will in fact cease in the purchase of securities.  That will then open up the market to investors who will demand higher rates due to higher perceived risk.  With that being the case, it’s likely that rates will never be seen at 5% again.

Lenders (preferred) are advising people to take advantage of these low rates before spring when they are expected to begin climbing to an estimated 5.5%.  Spring is also the busiest season of the year for buying real estate, so getting in on a low rate and low price is certainly a wise idea.  Rates should continue to rise at a fairly slow rate after that, then cap around 5.75%.

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