What Happens When Interest Rates Go To 10%? is a post from: Arizona Mortgage Team

I was alive in the early 80’s but I wasn’t worried about my mortgage payment. I was busy watching ET and playing little league baseball. But to hear people who are just a little bit older than I am, getting a 30 year mortgage at interest rates in the high teens in the early 1980’s wasn’t uncommon.

Assume for a moment that inflation kicks in and at some point in the future, the average rate that you see quoted on a 30 year fixed rate mortgage is 10%.

What does that do to your buying power?

If interest rates rise to 10%, your monthly Principal and Interest payment on a $200,000 mortgage will rise by $742/month.

Although I don’t remember what 10%-20% interest rates felt like, I can remember well what 7% interest rates felt like – it wasn’t that long ago! If interest rates rise to 7%, the P/I payment on a $200k loan will go up by $327 per month.

Are we going to see 10% interest rates in the foreseeable future? I don’t know, I will leave that to the experts to pontificate about. What I can say for certain though is that as interest rates rise, people are going to buy “less of a house” than they are currently buying.

And I wonder what that will do to real estate prices…

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Arizona Mortgage Rates: Look For Lower – Then Higher is a post from: Arizona Mortgage Team

Yesterday, the Fed announced that they would buy up to $1.2 Trillion worth of mortgage backed securities and long term treasuries – which should result in lower rates in the short term. I also expect it to result in higher rates in the longer term (possibly much higher) as inflation kicks in – although the smartest guys in the room don’t seem to think that inflation poses that big of a threat:

“In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued…” the Fed said in a release.

“Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.”

Well, I am glad that I am not the one faced with task of solving these problems, but from everything I can tell – here is what it all means in plain English:

In the short term, mortgage rates will go lower.

After the “short term” low-rate period?

Look-out.

Phoenix Arizona Mortgage Rates March 19 2009

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Will Interest Rates Go Lower? Yes. Here is Why. is a post from: Arizona Mortgage Team

Will Interest Rates Go To 4.5%?

We have been asked that question often recently. Normally, when people ask us “what is going to happen with interest rates” we usually reply with “well, one of three things can happen:

• They can go up
• They can go down, or…
• They can stay the same.”

If you asked me the question today of “are interest rates going to go down?” my answer now is “yes, interest rates will go down in the near term and here is why…”

Interest Rates Will Go Lower

The Federal Reserve released implementation details on its previously announced program to purchase mortgage-backed securities. This is a drastic new step that the government has taken in an effort to keep mortgage rates low, which in theory will spur demand and help increase home sales numbers as well as provide some help to those homeowners who are currently struggling to make their house payment.

Only fixed-rate Mortgage Backed Securities that are guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae are eligible for purchase. Other products such as adjustable rate mortgages, jumbo loans, and structured bonds are excluded.

Purchases are expected to begin as soon as next week and up to $500 billion will be bought. This $500 billion is in addition to the current Treasury’s agency Mortgage Backed Securities purchase program which has been running at $20-25 billion in recent months.

$500 billion is a huge number — probably big enough to cover most of the 2009 mortgage backed securities agency supply for 2009 and so it is difficult for me to see how mortgage rates don’t go lower – possibly solidly into the 4% range that everyone seems to be talking about.

Will Mortgage Rates Go Lower?

Yes.

And I reserve the right to be wrong. Right along with all of the other “experts” that you see on CNBC.

Happy New Year!

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Phoenix Arizona Mortgage Rates October 15, 2008 is a post from: Arizona Mortgage Team

Arizona Mortgage Rates for October 15, 2008

Rates have moved up significantly in the last week.

As we have mentioned before, trying to predict interest rates is tricky and we prefer not to try to be “rate predictors”.  The only advice that we can give during this period of uncertainty in the markets is that if you are currently in the process of applying for a mortgage loan, lock as quickly as you can in the process.

After all — when talking about interest rates, one of three things can happen:

They can go up, they can go down or they can stay the same.

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