This gets right to the nitty-gritty:
“The big pension funds that are moving money from bonds to the stock market are causing rates to rise,” says Bob Moulton, president of Americana Mortgage in Manhasset, N.Y.
Moulton doesn’t seem as concerned about rising rates as other experts. Soon investors will get a reminder that the situation isn’t as rosy as it seems and they may seek the safety of bonds once again.
“This is a normal minicycle,” he says. “I think rates will settle down again.”
The Federal Reserve remains on a mission to keep rates low. Unless the jobs market “improves substantially,” the Fed will continue to purchase $85 billion per month in Treasury and mortgage bonds, according to the announcement released by the Federal Open Market Committee after it wrapped up its two-day meeting Wednesday.
When the Fed pulls back on the assistance, there’s no doubt rates will spike rapidly, mortgage professionals say.
So what’s a borrower to do?
With so many outside forces influencing rates, borrowers should take advantage of the low rates while they can, says Derek Egeberg, a branch manager at Academy Mortgage in Yuma, Ariz.
Read the whole article (opens in a new tab so you may easily comment here): Mortgage Rates Get Boost From Stock Rally | Bankrate.com.
Inflation is historically low too, and the Fed is trying to increase employment, which puts pressure on price inflation; so, if you lock in a low mortgage now, you could end up paying off in more inflated dollars, which would mean you’d actually benefit more than would otherwise appear to be the case when only calculating your investment using the current, February 2013, value of the dollar.