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Historically Low Mortgage Rates Are Probably Short-Lived
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April 19, 2005
LOS ANGELES -- Last week mortgage rates took a dramatic drop, largely because
the FOMC meeting in Washington, D.C. revealed the minutes from the prior meeting
indicating economic inflationary data. The release proved a benefit to interest
rates for home loans, at least for a short time.
Many industry analysts, including myself, are speculatively saying that we may
be at a precipice regarding the ability to refinance or mortgage a new home at
the low rates we have seen over the last 2.5 years. In other words, "Get all you
can while the getting is still good."
The newly-released minutes from the Fed meeting in March leave many policy makers
concerned about inflationary pressures. This is apparently creating a need for
an aggressive stance.
The U.S. bond market rallied last week proving to be the catalyst for bringing
low mortgage rates down to a position they have not been in for the past six
months. This is very short lived. In order to effectively fight inflation, the
Federal Reserve is likely to boost short term rates at its next few meetings and
longer term rates are expected to trend upward, too.
The message for those thinking about purchasing a new home or a mortgage
refinancing is quite clear: Rates are on the rise and this may very well be
borrowers' the last chance to lock mortgage rate at these types of historic low
interest rates.
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