Interest Rate News

My, how a week makes a difference! Mortgage interest rates are nearing a low for the year. 30 year fixed rate loans are yet again below 6%. While tomorrow is a big day for economic news with the Jobs report due, investors have been very attracted to mortgage backed bonds over the past 4 days. This has led to a brief dip in mortgage interest rate bringing the 30 year fixed rate conventional mortgage below 6%. The big question remains; Will this continue?

The answer is, it is too early to tell for sure where mortgage bonds will find their comfort range. It appears that bonds are feeling both buying and selling pressure. The pressure to the buy side is that the national economy is showing signs of cooling and there is much anticipation that inflation can be held in check. The pressure to the sell side is that the economy has made a soft landing and there will likely be a run up coming in early 2007 which would once again raise major worries on the inflationary outlook. Usually when this occurs, the Fed is quick to act by raising short-term rates.

I get the feeling that all will rest upon the pending holiday sales season. If the economy is moving along at a moderate clip and retailers show profits compared to last year then we can anticipate that the economy is prospering moderately and inflation can be held in check. This would be great news for mortgage rates. Otherwise, all of the gains in the bond market could be given back with interest. This would ultimately cause rates to move higher and this reaction would be quick.

Bottom line, keep your eyes on inflation and jobs. Check this site for more upcoming information, and if you are on the fence about buying a house, jump now, the window may be closing after December!