This is what the folks at Wells Fargo have to say…
Last week, Congress was busy at work on negotiations to extend the Bush-era tax cuts. That news kept a lid on any improvement for Bonds and home loan rates, due to the prospect of an ever-increasing deficit.
And adding to the troubles for Bonds and home loan rates last week was news that inflation is growing in China… and growing fast. How does that impact us? Remember, it’s a global economy, so Bond prices all over the world worsen on news of inflation, which is bad for home loan rates.
So the big question is: Will home loan rates go back down?
Although rates are still near historic lows, they have been headed up… and indications are that those unbelievably low home loan rates may be behind us. In fact, there are only a few things that would bring back the lows that we saw in early November:
- If the tax cut package doesn’t get passed, it would be very bad news for the economy and Stock market – but it would help interest rates.
- If the Fed’s recent round of Quantitative Easing falls on its face and doesn’t meet its mission of creating inflation, boosting Stock prices, lowering unemployment and creating consumer demand – Bond prices could make some gains as the threat of deflation reemerges. But this is a long shot.
- If the financial problems in Europe worsen significantly – which would drive investors into the safe haven of the US Bond market – it could help Bond prices, but probably only modestly.
Realistically, the chances of these events happening are unlikely – and in the end, rates may see some brief and fleeting improvements, but many experts believe they will likely continue to creep up over time. And when you include the stimulative action of extending the present tax rates and adding further cuts, it’s tough to see Bonds or home loan rates improving much.
The good news is that home loan rates are still extremely attractive and are still near historic lows for now. If you or someone you know has been thinking about purchasing or refinancing a home, NOW is the time to call or email to get started.
Leisa Peterson is a Home Loan Mortgage consultant here in Truckee. You can contact her at:
LEISA PETERSON
Mortgage Consultant
Construction Specialist
Wells Fargo Home Mortgage | 11262 Donner Pass Rd | Truckee, CA 96161
MAC A0791-011
Tel (530) 582-6883 | Toll-free (877) 852-4399 | Cell (530) 448-1558 | Fax (866) 762-9198
leisa.peterson@wellsfargo.com
https://www.wfhm.com/wfhm/leisa-peterson/
Good information I would say. The large question is whether boosting stock prices will result in increased employment. If it does not, don’t expect significant increases in consumer demand (or the economy in general).