Mortgage Rates Still Rising, Slowly

With the housing market cooling, many patient investors have been waiting for the mortgage rates to decrease. But according to a July 20, 2006 article, “Mortgage Rates Creep Up,” written by BankNet360.com writer, Stephen Bernard, mortgage rates have slowly risen once again, but that there are signs that indicate rates may decrease in the near future.

“The average interest rate on 30-year fixed-rate mortgages increased two basis points to 6.89% as of July 19, according to a weekly survey of financial institutions conducted by Bankrate.com.”

A basis point is one hundredth of a percentage point, or .01 percent. Even though two basis points is not a significant increase, the effects are beginning to “creep” up.

“Rates on 15-year fixed-rate mortgages also increased two basis points, moving up to 6.49%.”

The mortgage rate increase affected all mortgage set year plans. “The average rate on five-year adjustable-rate mortgages increased three basis points to 6.55%, according to the survey.”

“Mixed signals from data releases and Federal Reserve Board Chairman Ben Bernanke led to interest rates holding relatively steady.” The slight rate increase appears to not be a sign of future rate increases. There is no definite pattern that suggests the rates will continue to rise.

There are signs that suggest the economy is headed in a positive direction. “Core inflation figures released yesterday were higher than anticipated at 0.3%, leading to expectations the economy was heating up.”

A positive economy could lead to lower interest rates. “Bernanke, during his semiannual address to Congress, said he expects a gradual decline in inflation during coming quarters, which investors interpreted as a sign that the Fed will soon stop raising short-term interest rates.”

The fact that mortgage rates have been rising only slightly in the past few months is also an indicator that the Federal Reserve Board may be ready to start a new trend of lowering interest rates.

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