Posted on March 31, 2010
As March winds down, there is quite a bit of anxiety in the market concerning the direction that interest rates may be headed. Today is the last day of the central bank's $1.4 trillion program to purchase mortgage-backed securities and housing-agency debt. It is believed that this program has suppressed any market driven rise in mortgage rates. Since 30 year mortgage rates have been available during much of the past year in the 4.75 to 5.00 percent range, people have gotten somewhat complacent and tend to believe that this level of interest rates is the new normal. History shows otherwise.
We have been bouncing along near a forty year low so the natural trend would indicate that rates will rise towards the long term average. Since 1980 the average interest rate has been 8.965% (with a range of 4.5 to 18.5 percent during this time period). Also, the large projected federal budget deficits into the foreseeable future does not bode well for the sustainability of low long term interest rates.
Anyone serious about purchasing property in the near term should jump at this opportunity to lock in a historically low long term interest rate - and not take the current conditions for granted!