We keep getting mixed messages about mortgage rate increases.  There is widespread agreement that they have been kept low artificially as we still cautiously peek out from under the flattening effects of our recession which isn’t that far in the rear-view mirror. Yes, things have gotten measurably better especially if you measure by the stock market. However, even the jobless rate has gotten into attractive territory and wages have been inching up.  Still, there are all these mixed messages making one wonder just how strong this recovery (certainly not a resurgence) is?

The top 1% who are largely in control are doing just fine.  Stock market is a great measurement of that. Even our current administration has presented a proposed new tax plan which is touted as a wonderful deal for the middle class, appears to be largely aimed at major tax breaks for those at the top and very little to show for where that is going to come from.  At this point it is currently kind of cloaked in smoke and mirrors with little to flesh it out but normally the 1% will come out on top and congratulate the rest of us on how things are looking so splendid for all of us swimming around in the middle and bottom.  Hmm, I thought I was talking about rates.  It appears I got sidetracked here.

Rates must go up. AND they have been saying that for a couple of years now but most times when they do, mortgage applications fall off and guess what the rate settles back down a bit. That is more of this tightrope dance I have talked about before. The Fed is really trying to right the balance without tipping over our fledgling recovery.  That is just one of many jobs that I am glad I don’t have.

With the Feds starting to sell off bonds that they bought during the downturn it must affect those rates but as of this writing they are down just under 4% again.  Those dinosaurs, like myself,  that were in the business years ago, when rates for 12-19% look at 4% and just smile. How quickly our frame of reference is distorted.


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Fred Adams