Rates are rising and now is the time to buy! See Bank of Americas take on it below: What does all of this mean for home loan rates? Positive economic news often causes money to flow out of bonds and into stocks, as investors hope to take advantage of gains. When this happens, bonds can worsen, and so can home loan rates, as they are tied to mortgage bonds. We continued to see some of that dynamic last week. One key factor to monitor is inflation, which hurts the value of fixed investments like bonds. Inflation at the wholesale level rose unexpectedly in May. However overall inflation pressures remain muted and that should help keep bonds and home loan rates at attractive levels. Another factor that has helped bonds and home loan rates remain attractive is the Fed’s bond purchase program known as Quantitative Easing. The Fed has been purchasing bonds and Treasuries at the rate of $85 billion a month since late last year. But as the housing and labor markets have begun to improve, there has been talk that the Fed should taper their purchases soon. The uncertainty surrounding this decision has led to much of the volatility in the markets of late. Bank of America
Posted on: Wed, 19 Jun 2013 14:23:23 +0000