What is the reason for the recent home mortgage rate increase I asked myself just the other day. It seems recent success by the FED at thawing the nations' housing and credit markets has been trumped by record Washington borrowing amounts driving up yields on Treasury bonds which play a major role in setting interest rates on home loans. As volatility rises in the bond market due to confusion over what the Fed may do next, along with the chance of buying up more debt, yields are likely to increase modestly. The Treasury's next policy meeting at the end of the month will be widely watched by investors. Keeping mortgage rates low is key, according to a number of economists and policy makers, to help get the economy back on track.
I'm not certain how all that stuff works, but I do believe perspective is in order. Rates are still low by historical standards. Since 1985, the 30-year fixed mortgage rate has averaged 7.84%. That's distorted by years of double digit rates in the 1980s and early 1990s, but even if you look at more recent times, today's rates look good. In 2008, the median rate on the 30-year fixed was 6.2%, which means it was higher than that for half the year. In 2007, the median rate was 6.32 percent.
I can't say I understand every little economic detail that plays a part in influencing mortgage rates, but I do work with an expert at Superior Mortgage who is absolutely the best.