3 Important Things About Interest Rates In 2014

As far as the real estate and mortgage industries are concerned, rates are supposed to rise throughout 2014. However, it’s now almost halfway through 2014 and rates have really not risen very much, and are definitely not up to 5.1% as the Mortgage Banker’s Association predicted at the end of 2013. For homebuyers, this is, of course, excellent news.

To someone not in the know, this may seem strange. But let’s take a minute to look at what affects interest rates:

Mortgage Bonds. Mortgage Bonds are in demand right now because our economy has not recovered quite as quickly as we would have liked. Job growth and mortgage applications have both slowed down. When mortgage bonds are in demand, mortgage interest rates remain low, and that’s the case right now.

Inflation. When inflation happens at a fast rate, mortgage bonds become less desirable investments. Right now, there is very little inflation, meaning that mortgage bonds are in demand, keeping your interest rates down.

The Taper. Currently, the Federal Reserve is buying billions of treasury bonds. They’re going to stop, soon, though, and have begun tapering off their buying so that interest rates can start to rise a bit. But until that happens in entirety, the Federal Reserve is artificially keeping mortgage interest rates low.

These are the things currently affecting your mortgage rates, and it’s my job to understand them and to keep you aware of your options.


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