Interest Rates are going up? Why?

I am sharing this post from Noel Brownell from Comstock Mortgage. Very informative and helpful! Call if you have any questions! Kriquette Patrick 916-521-1071 DRE #01921636

Written by: Noel Brownell from Comstock Mortgage (916) 367-7117 – Posted 7/2/13

As many have heard interest rates are going up. However, they are still historically very low. The big question I keep hearing clients asking is why? What is going on in the market that has caused interest rates to increase from our historic lows and where are they going? The answer is simple; interest rates are going up and have been low because they have been artificially driven down by the government, who has been purchasing a massive number of mortgage backed securities, also known as bonds. As the government purchases these bonds the price goes up. As the price of bonds goes up, interest rates inversely go down. The government went on a purchasing spree of bonds in the hopes of stimulating the economy and it appears to have helped. As the economy improves, talk has increased among financial markets of the government slowing down on its stimulation and purchasing of bonds. Consequently, investors have started selling off bonds, driving down the price. As the price of bonds decrease interest rates increase. If you want to know what interest rates are going to do, take a look at what the 10 year T-note is doing. Interest rates will usually do the opposite. Be careful not to confuse the 10 year T-note with the 10 yr yield on bonds because the yield will have a direct relationship with rates and not an inverse relationship. I have included a very nice graphic representation of what interest rates have done over the last 40 years. Take a look, a deep breath and get your offers out there because interest rates can be expected to increase.
Mortgage Rate Chart
Written By: Noel Brownell

About Kriquette Lyngstad

Kriquette brings a broad range of skills from her years of experience with Hewlett-Packard and with SMUD. Kriquette's prior experience spans across a wide depth and breadth from sales, marketing, Global web interaction, web technologies, social media, mobile design, customer experience management to project and operations management. Along with thoroughly enjoying her career in the customer experience and technology field, Kriquette has always had a passion for real estate and has always been fixated on watching the housing market Finally, Kriquette was able to combine her passions for sales, web marketing and real estate by obtaining her real estate license and joining the 1st Place Realty team. While Kriquette is passionate about technology, sales and marketing, her main passion and goal is superior customer experience and delight! You can contact Kriquette at kriquettelyngstad@live.com or by cell at (916)-521-1071.

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