Bond markets continue to react very negatively to the Federal Reserve’s plan to purchase up to $600 Billion of Treasury Securities on the open market ( referred to as Quantitative Easing or “QE2”) intending to try and keep interest rates low. The Fed would accomplish this by literally printing money and using it to purchase government securities hoping to lower the interest rate yields on these benchmark securites by increasing demand for these securities, thus raising their price and therefore decreasing their interest rate yield . Many investors are concerned that this plan may lead to a rapid return of inflation, and therefre investors insisted on higher yields for long term bonds, thus increasing interest rates on mortgages. Rates thusly moved up another quarter of a point the past few days and have moved up over a half point over the last several weeks since reaching historic lows.
It remains to be seen if the Federal Reserve’s plan will have it’s intended effect on interest rates, and the direction of mortgage rates in the near future is uncertain. The conclusion to this week’s newsletter on interest rates from HSH Associates states: ” Despite this week’s rise, mortgage rates do seem to have leveled off. Barring any blockbuster economic data, there is a good chance that we have peaked, give or take a few basis points. If we have, and if history is any guide, we might see some slight improvement in rates over the next couple of weeks.”
The following are interest rate quotes from Al Hermann of American/California Financial Services ,
|Conforming 30 Yr Fixed up to $417000|
|Conforming Jumbo 30 Yr Fixed $417001 – $625500|
|Conforming Jumbo Fixed $625000 – $729750|
|Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)|
For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.