The news happens so fast, it is hard to keep up with it sometimes. This is especially true for the finance industry abroad from credit card companies to mortgage lenders; each day comes with it a new set of challenges and sometimes setbacks reiterating to us all that these surely are "trying times".
        There is a tricky and somewhat elusive equilibrium that must be struck between the forces that drive mortgage interest rate pricing. On one hand when the economy is doing very poorly and the stock market is in the gutter bonds historically do well and drive mortgage pricing to historic lows. On the other hand when the economy is doing great we typically do not get the best mortgage pricing. In a healthy economy interest rates would stay at around 7.5% and the higher the rate our economy can sustain the higher the interest rates will go. The companies funding the loans after all are publicly traded companies. As with any industry, when things are going well the price of stock increases and so do the price of the goods being provided by the company(s) in question.
        The question then comes up about affordibility. Personally, I would rather be in a stable economy where people can afford a 7.5% interest rate than in an economy where people cannot afford a 5.5% interest rate. I am a real estate financing expert and I talk to people every day who are having trouble making their monthly mortgage payment on time. Some of them are people looking to refinance in order to lower their monthly expense ratio; some of them are my clients who could afford the payment easily when they purchased the home.
        With the increases in the cost per barrel of crude oil and the record profit margins that many oil companies are making off with it is no wonder that people are having a harder time making their monthly commitments than in the past.
        In watching and reading the financial section of the news today it came to my attention that mortgage rates will most likely be on the rise tomorrow morning. The Institute for Supply Management today came out with a higher than expected reading causing stocks to edge upward. The yield on the ten year treasury bond which moves opposite its price jumped from yesterdays low of 3.53% to 3.693%. The lower the reading, the lower the interest rate will go. This will most likely cause tomorrow mornings mortgage rates to increase .125% - .250%.
        This is not pleasant news for me to hear as a mortgage profressional, of course I would love to give out the 4.75%'s and 5%'s all day long. Still, the reason everyone wants the 4.75% and 5%'s is because that is what is being advertised on television, radio and internet. The truth is that it takes a little bit of time to implement marketing campaigns and as volatile as the current market is, the rates advertised are usually expired by the time they hit the public.
        While like anyone else, I love the low interest rates I consider todays news overall good news for the economy. I know that it is not enough good news for things to stablize with the upcoming issues that the rest of the market is dealing with right now. Still, I look forward to increasing interest rates that people can afford and to a time when people start buying homes again. What good is a 5% interest rate if most people cannot even afford it? 



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Thanks for reading and stay tuned!