A Bottom In Mortgages Coming?

Since October of last year we have seen a steady decline in mortgage rates. There are many factors that have prolonged this decline one of which is the Federal Reserve Bank. The Fed continues to dump money into the housing market by buying up MBS in hopes to find a bottom in home prices. When trillions are dollars are being thrown into securities in the mortgage industry it only makes sense that rates will decline. Ben Bernanke and the Fed has stated that they will continue to do this so will there be a bottom in mortgage rates anytime soon?

It is highly likely that we will continue to see this downward trend. No one really knows where the bottom will be but it is not going to happen until the government thinks there has been a bottom in home prices. Home prices, on a national average, are now 31% off the highs from June of 2006. For the month of February, the most current data, home prices continued to slide. Even with rates well under 5% the American government is realizing that putting a bottom in the housing market is much harder than predicted.

The only true way to get America out of this issue is to create jobs and savings. This country is consumed with debt and it is coming back to haunt us. Now that the value of homes has drastically declined, the level of debt is increasing in not only consumers lives but in everyday corporate purchases. If America continues to go on living this way, it is going to be very difficult to see the housing market return to normal anytime in the near future.

By: Jesse W.

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