Q & A: Should I Be Locking in Interest Rates?
Dec 14, 2012
Q. Kevin, what are your thoughts on interest rates. Should I be locking them in?
A. We made all-time lows on the 30-year mortgage a couple of weeks ago at 3.31%, since then we have bumped slightly higher to 3.34%. The risk in my opinion is to the upside for longer-term rates, despite the fact the Fed has promised to keep long-term rates low for the next couple of years. What has me concerned, is that for the for the first time in a couple of years, we are now starting to hear a little different song being sung by members of the FOMC. One that is not simply "time-based," but rather based on the improvements of the US housing sector, inflation and the employment situation. From my perspective this means the Fed is now throwing a disclaimer on their long-term low rate "guarantee" that has so feverishly been advertised the past few months. They are essentially saying if the US housing market continues to improve, if inflation moves beyond 2.5% or we see unemployment push below 6.5% then all bets are off and they are making NO guarantees on lower long-term rates. This makes me a little more nervous then I have been in the past, therefore I believe locking in longer-term rates at this juncture is a smart play. Hope this helps...
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