Mortgage watch: Interest rates move up

On March 31st an event occurred that could affect home buying and re-fi’s in the near future.  It was inevitable.  An event that most everyone has been waiting on for some time….the Federal government has ceased purchasing mortgage backed securities in the open market…Since 2007 the Fed has purchased 1.25 trillion dollars of these loans.  That’s Trillion with a “T.”

Here in San Diego (and everywhere else) those Fed actions have helped keep interest rates low and stimulated buying (and re-financing) while the real estate market bottomed out over the last 3 years. For a beleaguered San Diego real estate market, that was one of the few bright spots – the low interest rates for qualified borrowers.  Even if you weren’t a home buyer, if you were one of the lucky (or smart) ones, you may have refinanced your loan during this time and you may have gotten a 30 year fixed mortgage at or near 4 ¼ % — again, for qualified borrowers.

Well, those days are most likely gone for some time.  Interest rates began inching up toward the end of March and are still creeping up at this time.  It’s still a great time to be a buyer in San Diego.  Home prices appear to have bounced off of their bottom and right now it looks like conditions are favorable for a little spring selling bump.  And in spite of the upward creep, mortgage rates are still low.

These conditions look to prevail for the near future.  The concern of course is rising interest rates due to inflation but all signs point to a slow economic recovery especially in the all important category of employment.  Without healthy employment there can be no inflationary pressure for goods and services and interest rates are likely to remain low.  These conditions can’t last forever though.  As employment picks up during the recovery it is likely that interest rates will increase as well.  What does it all mean?…that right now is a good time to be a buyer in San Diego.