Interest Rates Continue to Climb During Economic Rebound

January 27, 2005
When the Federal Reserve Bank’s board of governors next meets—most independent analysts expect them to make the latest in a series of mild upwards adjustments of the key lending rate since the US recovery began in the 3rd quarter of 2003. But, despite the fact that many banks unwilling to wait for the official word have been gradually ticking up interest rates up in over the last few months, mortgage-shoppers should be able to ride the wave of low interest rates still sparking new-buyer home sales well into 2005. Of course, the usual suspect is to blame – mortgage lender’s desire to continue feeding an improving economy.

That being the case, even this year’s fourth straight upwards move is still likely to measure up as a bargain when realistically compared to interest rate levels of the past. Most analysts have characterized the expected increase of around 6.25 percent as both responsible on the part of the Fed and relatively moderate then go on to note that it will still leave quite a lot of air between where rates are expected to climb to next year and the double-digit market-stifling environment of the mid-1980s. The Federal Reserve could very well bump rates up four to five times over the next year and even those hikes would still be well tolerated by the strengthened mortgage loan market.

Home buyers here in the US have been enjoying dramatically low mortgage rates over the past couple of years and it’s therefore unsurprising that they’d like to continue to take advantage of ways to keep their mortgage payments low. Obviously mortgage lenders will respond, so consumers shouldn’t be surprised at all if they find themselves presented with a wide variety of new mortgage products in the marketplace; especially a few designed specifically to better manage repayment levels in the midst of this slowly rising rate environment.

Other leading markets analysts have been recommending to consumers who’ve gotten worried about shopping the home-buying market, that they should be very aware that despite all the negative attention currently focused on rising mortgage interest rates, Federal increases do not necessarily impact their home mortgage rates directly, as these tend to correlate more closely with 10-year Treasury Issues, and so both homebuyers and homeowners can still expect to have nearly unprecedented opportunities to either refinance their current mortgages or to trade up to new home mortgages.

Given the gloomy mortgage rate forecasts of only six months ago, it’s an unexpected window of opportunity for them to take advantage of a greater range of affordable mortgage lending options than ever.

For more information on savings or borrowing options or to find tools, calculators and information regarding financial products ranging from savings accounts, cash-out and debt consolidation loans to mortgages and home equity lines of credit, interested consumers can visit an online mortgage lending center such as www.mortgage-hound.com