Mortgage Rates Forecast Just Turned Around in Early July

The current mortgage rates forecast took a complete 180 in the last week due to the actions of the Federal Reserve Bank.  The Federal Reserve Bank decided that it was going to buy US debt which would essentially put a cap on interest rates.  After announcing this move, the 10 year treasury rate yield immediately fell almost 5% in one trading day.  It seems that President Obama is going to make sure that mortgage interest rates stay well below 6% for quite some time.

Now that we know the government is willing to pull out all stops, it greatly changes the mortgage rates forecast.  Most market mavens thought that the 50 day moving average of the 10 year treasury rate would hold as support but the government strategically decided to announce that the Federal Reserve Bank was going to buy back debt on the same day that the 50 day moving average was tested.  This is not ironic; government officials knew exactly what they were doing.

With this being known, we have to expect to see lower mortgage rates in the near future.  It is highly unlikely that President Obama is going to let rates go over 6% anytime soon.  Most of his economic advisers feel that the United States has to spend their way out of the current recession and that is exactly what they are doing.  The good news is that this is a great time to get some of the best rates on a refinance.  If you have been thinking about it in the past few months, now might be the time to fill out that mortgage application.