Why Are Interest Rates Rising? – LoanLove.com Explains In Their New Mortgage Interest Rate Post

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A new article from LoanLove.com helps home owners and buyers to better understand the recent mortgage rate hike and how it will affect their home purchase and refinance plans.

LoanLove.com has a mission to help consumers and borrowers alike in obtaining the latest information on mortgage lending trends, the real-estate market and the U.S. financial landscape for the purpose of helping them obtain a home loan they love. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals. To fulfill this goal LoanLove.com is continually updating their website with new articles and guides. LoanLove.com continues to help homeowners to understand the real estate market with their new article that answers the question “Why are interest rates rising?”

With home loan interest rates going up so fast in just a few short days, many people are wondering what exactly happened. The Loan Love article explains that, just like a lot of interest rate issues, this one is tied up in bonds. The article says: “To help bolster the faltering economy, the Federal Reserve initiated a bond-purchasing program, spending $85 billion each month to buy U.S. Treasury and agency mortgage-backed securities to help keep interest rates low, in turn spurring consumer purchasing. But earlier this month, Fed Chairman Ben Bernanke told reporters the Fed could begin tapering off bond purchases in the coming months, perhaps even terminating the program by the middle of 2014.”

The article goes on to explain: “In a statement issued on June 19, the Fed also noted that it “sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall.” It also expects inflation to be at or below the 2 percent objective set to further economic recovery. Taken together, the statement and Bernanke’s comments were enough to send stock market investors running for cover, jacking interest rates upward: Once the news was announced, the average 30-year mortgage rate jumped from 3.74 percent to 4.14. The largest mortgage lender in the U.S., Wells Fargo, hiked its rates from 3.9 percent to 4.5 percent.”

This mortgage rate increase took many real estate investors, home buyers and current home owners completely by surprise. The news is especially damaging to those who had been putting off purchasing a home or refinancing their current mortgage. But despite the great disappointment many people are experiencing, the situation is not as bleak as it seems. The Loan Love article says:

“If you’ve been sitting on the fence, undecided whether or not to apply for a mortgage or to refinance your existing loan, you’ve probably worn out the toe of your shoes (and the seat of your pants) by kicking yourself repeatedly since the recent surge in interest rates. But all hope is not lost. Most financial experts say that while rates likely won’t return to their former low levels, it’s also not likely they’ll have another similar jump before the end of the year. Of course, those are the same experts who predicted rates would remain low until the unemployment rate falls to 6.5 percent, so you might want to take that guidance with a huge grain of salt and lock in your rate now.”

For more information on the recent mortgage rate increase and how it will affect home buyers and owners, please visit LoanLove.com.

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Kevin Blue
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