Feb. 5 (Bloomberg) — The average U.S. rate on a 30-year fixed mortgage rose this week, thwarting Federal Reserve efforts to cut borrowing costs, on investor concern the government will increase spending.
The fixed rate rose to 5.25 percent from 5.10 percent last week, Freddie Mac said in a report today. Last month the rate fell to 4.96 percent, the lowest in data that goes back to 1971, according to the McLean, Virginia-based mortgage buyer.
“Investors are growing a little bit nervous about all the Treasury bonds they’re going to be asked to buy to finance the government’s response to the financial crisis,” said Mark Zandi, chief economist of Moody’s Economy.com.
I disagree with Zandi. I don’t think investors are "a little bit nervous"- I think they are scared to death. Investors have a right to be concerned about increased government spending. After all, does anybody think there’s a chance that increased spending is not going to happen?
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twist,
of course there is a “chance” that increased spending will not occur. like a snowball’s “chance” in hell.
A have heard from a few people that mortgage interest rates will skyrocket and that is why I should buy a house now. My response is the following: if interest rates increase, that means the house prices will decrease in turn. In that case I will just pay cash and worry about a mortgage.
Surak,
I seriously doubt rates will go up.
Worst case, to stimulate things, we’ll just monetize the debt.
I’ve thought of a new motto for the Federal Reserve:
“Debasing the Currency since 1913″
Chuck
You may be right, but either way that is not going to stop the decrease in home prices.