The Reason For the Rise

When inflation fears recently led central banks in New Zealand and Europe to suddenly increase their short−term interest rates, the repercussions were immediate. Interest rates soared around the globe − especially in the US.

According to the Chicago Tribune, mortgage interest rates have reached their highest levels in nearly a year! In fact, Freddie Mac recently reported the fifth consecutive week of rate increases across the board since May 15th!

If you or someone you know is considering a new home purchase or refinance in the next 12 months, I urge you to investigate all available options now instead of waiting any longer.
Yes, it's true. Mortgage interest rates are currently under 7.00%, but they may not remain there for long. As history has demonstrated, a rapid rise in interest rates is sometimes a precursor to even higher rates in the coming months. In 1993, interest rates on a 30−year fixed rate mortgage jumped from 6.69% to 8.23% in just five months. With this latest surge in
interest rates, can you really afford to wait any longer?

Remember, mortgage rates are based on mortgage−backed securities, which investors buy and sell like stocks on the stock market. If returns are more attractive in other countries and other markets, investors and their capital will follow − and rates will likely increase. It's that simple. Combine this with the present turmoil of the post subprime housing market, and it really does make sense to at least consider all of your available options now. Honestly, if this sudden surge in interest rates was the only sign of a changing market, I wouldn't waste your time. But,
growing concern about inflation and how the Federal Reserve might respond, combined with increases in housing inventories, decreases in home values in many neighborhoods, and the tightening of credit standards and guidelines is just too much evidence to ignore.

While no one can predict exactly what will happen, including me, experts in the bond arena have expressed concerns that rates will continue to increase throughout the rest of the year. Some believe that the Federal Reserve will be forced to raise interest rates prior to year's end. This would increase interest rates for existing Home Equity loans, credit card loans, and potentially existing ARMs. Find out how these and other changes could affect your financial situation.