Mortgage rate predictions are showing very bad news for current home owners. Last week we saw a HUGE jump in mortgage rate; a jump of almost 50 basis points. Many would argue that this is good for the housing market as higher rates will cause lower home prices which in turn would get more people interested in buying a new home. Well, that is all fine and dandy, but home prices have fallen every single month since the top of June of 2006. Falling prices is not what the housing market needs to find a bottom.
Many market mavens predicted that the housing bottom would be seen in March when mortgage rates were near an all time low and President Obama enacted the Making Home Affordable plan. Mortgage rates forecasts were quite clear back then as the government was buying up mortgage backed securities and Federal Reserve Bank chairman Ben Bernanke was doing everything in his power to make sure rates stayed under 5%. Well, the artificial rates could not last as free markets started working even though the government had a strong hand in what was happening.
With treasury yields had been in an uptrend since the beginning of the year and it was only time before mortgage rates started to follow. Now home owners have to worry about the price of their homes falling even more as mortgage rate predictions are showing that overall rates are likely to head higher and possibly much higher. If you had a problem selling your house for the asking price before, it could get a lot worse.