When Are Mortgage Rates Going to Drop?

November 30, 2010 in Seattle Buyer's Guide

Here is the first in a series by lenders we know.  This article courtesy of Danny Forbes, Sterling Savings Bank.  Thanks, Danny!

Mortgage Interest Rates have remained the same as last week.  Please drop me an email if you want me to send you a flyer with today’s rates.

I have been receiving quite a few questions from my clients asking when rates are going to drop lower.  The reality is that we have probably already seen the lowest rates we are going to see.  I had mentioned in last week’s update that the Federal Reserve’s goal with QE2 (Quantitative Easing 2) was to promote inflation, lower the unemployment rate, and raise Stock prices.  All of these things are bad news for Bond Prices and when Bond Prices go lower, Mortgage Rates go higher.

The recent development from this week is that the Fed finally acknowledged that QE2 could weaken the US Dollar, which could promote a somewhat stronger recovery.  The reason for this is because a weaker US Dollar makes American goods more affordable to the rest of the world, which will increase spending on American goods and therefore help the economy.  Just like the 3 items I mentioned above, a stronger US economy will push stock prices higher, resulting in lower Bond Prices and higher Mortgage Rates.

In summary, it keeps looking more and more like Mortgage Rates could continue to go higher in the near future.

Below is a link I wanted to share with you.  It shows that Seattle is one of the least likely cities in America to have lower Real Estate Prices in 2 years.  The chart is prepared by PMI, which offers Mortgage Insurance, and spends a significant amount of time researching the Housing Market to minimize their risk.

http://www.smartmoney.com/tools/worksheets/?story=SMARTMONEYMARKET101115

Have a great Thanksgiving!

Danny Forbes
Sterling Savings Bank – Home Loan Division
Loan Officer
6100 219th Street SW, Suite 480, Mountlake Terrace, WA 98043,
Direct: 425-673-8231
Danny.Forbes@sterlingsavings.com