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QUESTION: Although rates are still near historic lows, they have been heading up. So are those unbelievably low home loan rates behind us for good?

ANSWER: There are only a couple things that would bring back the lows that we saw just a couple months ago:

1. If the Fed’s recent round of Quantitative Easing falls on its face and doesn't meet its mission of creating inflation, boosting Stock prices, lowering unemployment and creating consumer demand, then Bond prices could make some gains as the threat of deflation reemerges. But this is a long shot. As the saying goes: “Don’t fight the Fed” – which means that if the Fed wants to raise inflation, it most likely will.
2. If the financial problems in Europe that we saw in 2010 worsen significantly in 2011, then this could drive investors into the safe haven of the U.S. Bond market, which would help Bond prices but probably only modestly.

Realistically, the chances of these events happening are unlikely. And when you consider the stimulative action of extending the tax rates and adding further cuts, it’s tough to see Bonds or home loan rates improving much. So the bottom line is that rates may see a brief and fleeting improvement here or there, but many experts believe that the overall trend will continue – meaning home loan rates will creep up as we progress through 2011.

The good news is that home loan rates are still extremely attractive and are still near historic lows for now. That may not be the case in the coming weeks and months. If you or someone you know has been thinking about purchasing or refinancing a home, NOW is the time to call or email to get started.

The material contained in this newsletter has been prepared by an independent third-party provider. The material provided is for informational and educational purposes only and should not be construed as investment, financial, real estate and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

As your Trusted Advisor, I always want to make sure you are clear on all details of the home financing process. If you or someone you know are interested in purchasing or refinancing a home, give me a call today!

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