Why are mortgage rates rising?by Tim Manni
By now you know that mortgage rates are rising — three out of our four blog posts this week discussed the fact. Amy Hoak of MarketWatch.com just wrote an article titled “Mortgage rates jump to six-month highs.”
But, why are mortgage rates rising? There’s not just one answer, there are a couple other factors in play:
1. If the economy is really starting to improve, and with the Fed’s QE2 program expected to help it improve some more, we could be in for a much firmer recovery than was expected just a couple of months ago. The result: higher rates.
2. There was a lot of new Treasury supply hitting the market this week, explains HSH.com’s VP Keith Gumbinger, which met tepid demand (probably due to investors looking to lock in positions/gains for the end-of-year period.
3. Simply stated: there’s more certainty than before. Now that the Congressional elections have passed, some political uncertainty has dissipated along with the elections.
“With some greater certainty comes greater clarity and confidence about the durability of the recovery, and investors seem to be shifting at least some holdings out of ’safe haven’ spots in favor of other opportunities (stocks, oil, gold, etc.),” explained Gumbinger.
Looking for a long-term forecast for mortgage rates? If so, check out HSH.com’s “Two-month forecast for mortgage rates.”