Jun 20 2013
We woke up this morning to the highest mortgage rates of the year after Fed Chairman Ben Bernanke signaled that the years of low interest rates may be ending soon. Ben Bernanke in a speech on Wednesday said the federal reserve may start slowing its economic stimulus programs later this year.
The Fed’s in a massive effort to restart the housing market has implemented various economic programs which resulted in historically low mortgage rates over the past few years. However, there has been clear signals that the Fed were throttling back on the stimulus programs. Then came the clearest signal of all the Fed’s Chair speech on Wednesday.
Thursday May 20th 2013 one day after Bernanke’s speech, American families woke up to mortgage rates above 4% which rose by .375% by the end of the day. In real terms the monthly cost of paying a $200,000 mortgage loan increased by $45 today.
To end on an optimistic note, by historical standard mortgage rates are still very low and unlike most consumer loans are tied to long term interest rates. While rates are unlikely to fall back to the historic lows of the past few years, the rapid increase will probably slow over the next few days.