Mortgage Rates. Where Are They Going?

Here we are. The fed has fulfilled his commitment with the purchase of $1.25 Trillion, we had a rocky week with the auction of the Treasuries, the $8,000/$6,000 tax credit for home buyers is winding down and rates seem to be holding up. Yes they have gone up slightly but nowhere near the abrupt increases the most economists predicted. There are logical arguments for predicting increases in decreases but most crystal balls seem just as uncertain as the experts as CNBC. Four key points to keep in mind as we go into next week:

1) Most economist and reporters like Larry Kudlow and Maria Bartiromo from CNBC feel that the stock market is due for a minor correction. On Friday the DOW broke 11,000 to show levels not seen since September of 2008. If a sell off was to happen, it would mean that institutional traders will look at the safe heavens of the treasuries with a possibility of pushing yields and interest rates to even lower levels.
2) According to Bankrate.com, 62% of the panelist believe that Interest rates will either decrease or stay the same in the next 7-10 days.
3) Jobs and Housing continues to be the main concern according the White House for any “true” recovery to take place. Construction will bring the largest numbers of jobs back into the economy.
4) While the unemployment rate remain at the current 10.8%, and the inflation fears remain in check, the fed will have no rush to increase short term rates.
5) According to an interview with Jason Benderly aired on CNBC this last Friday, the decrease in construction over the last couple of years will be felt in the months to come due to the organic growth of consumers hungry to achieve the American Dream of home ownership.

The San Diego Real Estate market continues to show strong recovery signs. Lets face it, at these price levels and if you had a choice to live anywhere in the country, why not chose a sunny coastal community.