Interest Rates on 30-year loan in U.S. rises to 5.03%

October 29, 2009 by · Leave a Comment
Filed under: Real Estate News 

Looks like the Federal Reserve will need to purchase more mortgage-backed securities or we are going to see interest rates on home loans rise to reflect the real risk in the economy.  So far as stated by many news outlets including AP, the Fed has already purchased $1.25 trillion dollars in MBS bonds from different banking institutions.

If we see rates rise much further then we will see a slowdown in the real estate recovery and that will most likely bring us back into the recession.  In other news, the Gross Domestic Product (GDP) in the U.S. rose to an annualized rate of 3.5% in the latest reading.

Associated Press, Washington D.C.:

Rates had hovered below 5 percent for nearly a month until last week. They hit a record low of 4.78 percent in the spring, but are still attractive for people looking to buy a home or refinance.

The rates have advanced despite action by the government to prop up the housing market and stimulate the economy. The Federal Reserve has pumped $1.25 trillion on mortgage-backed securities in an effort to lower rates on mortgages and loosen credit.

Rates on 30-year mortgages traditionally track yields on long-term government debt.

Still, lenders have tightened their standards dramatically, so the best rates are available only to borrowers with solid credit and a 20 percent down payment.

Source: AP

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