Are mortagage rates going to decline to where they should be?

Question

I read that the rates are too high compared to where they should be, cause by the Fannie Mae / Freddie Mac scare. Is this true, and will these rates likely go down soon?

Answer 1

Yes there is some fear, but rates to us will also increase due to the Banks' need to make more cash to cover the losses they will have with foreclosure costs.

The banks can borrow at new lows in interest, but expect that rates will go up slowly for the next couple of years.

Answer 2

rates are going UP do to inflationary fears!!

Answer 3

All I know is that it is the time to BUY!!! And that's exactly what I did...my interest is at 6.5%, and if rates happen to drop later on, I can always refinance. What if they keep increasing? I'll stay at my 6.5%. The good thing for me, at least an advantage, is that the wife is a realtor and she knows really well what to do. This is our second home, one for rent the new one will be to live in. So rates are no problem for me.

Answer 4

Yes. This is due to fear factor. 6 months back, the 15 year fixed rate conforming loan was about 4.5 % with 2 points. Now it is about 6%. I felt bad. Because of declining house values, I hesitated to buy. Interest rates now definitly much higher than 6 months before, not reflecting the reality. We have to wait and watch how the new bill changes the situation.

Answer 5

The rates are still historically low. Back in the late early 90s, rates were in the double digits. And they'll reach that point again eventually.

We really can’t afford to have rates this low as it is. Low rates on loans = even lower rates of return on investments. I don’t know about you, but I’m getting sick of the tiny yields I’m getting right now.

Answer 6

there is no place that rates "should be"  Rates are increasing because of inflation.  They actually are where they "should be".

If the fed lowers rates, inflation is a problem.  To keep inflation down, the fed increases interest rates.  However, we are also in a period of higher unemployement, which increases with higher interest rates.

I would guess that rates are still increasing.

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*****EDIT: I stand behind my remarks.  There are many other factors then the "macs" causing interest rate increases.

Answer 7

i think you are referring to the difference between the fed rate and the interest rates on mortgages now.  yes in the past the spread between the two was much closer.  risk is being priced abnormally high right now in comparison to the fed rate.  still rates are still at very low levels historically.  rates will probably rise.  The lows you saw in '03, I wouldn't hold my breath waiting for them to go below or even match them.  check yahoo finance, it's like 6.5% for the average.   7% by year's end wouldn't surprise me.  5.5% on the other hand would.

Answer 8

Where do you think they "should be?"