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What’s Happening with Mortgage Interest Rates?

If you’re like a lot of northwest Florida home owners, you may have been a little confused (and concerned!) by the brouhaha surrounding both the recent debt ceiling debates and the subsequent reduction of the US credit rating. We were. Taking a cue from Keeping Current Matters, we want to take a moment to talk a little about the possible impact the downgrade of the credit rating will have on mortgage interest rates.

Mortgage rates normally run parallel to the country’s Treasury bonds. When many people are buying Treasury bonds, the return on those bonds decreases. If less people are interested in buying bonds, then the return on those bonds must increase, in order to draw more buyers. If bond returns increase or decrease, mortgage rates normally do the same.

Some experts feel that the downgrade in the country’s credit rating will cause people to see greater risk, and therefore be less likely to invest in US Treasury bonds. That would necessitate returns to push upward; any investor tends to seek higher returns, as compensation for the perceived greater risk. If that happens, mortgage rates will probably increase.

Others believe the exact opposite is likely to happen. If people think the US is struggling financially, they may question the entire world economy. If they do, there’s a possibility that they might still trust the US bonds over other investments. If that occurs, Treasury bond returns would decrease as demand increases. Mortgage interest rates may actually soften in this scenario.

Again, no one knows for sure what will happen. Rates could go up, go down or stay relatively unchanged. If you would like to know what interest rates are doing locally, contact me for a personalized quote.

If you’re thinking of buying or selling a home in Panama City Beach or Destin, the Veach Team is prepared to help you find the Florida home of your dreams. Contact us today, and let us show you why “Life is a Beach” here in beautiful Destin! And don’t forget to “LIKE” us on Facebook – we’d love to talk with you.

Posted in Buying Real Estate, Selling Real Estate, Uncategorized and tagged , , , , , , , , , , , , , , , , , .

What’s Happening with Mortgage Interest Rates?

If you’re like a lot of northwest Florida home owners, you may have been a little confused (and concerned!) by the brouhaha surrounding both the recent debt ceiling debates and the subsequent reduction of the US credit rating. We were. Taking a cue from Keeping Current Matters, we want to take a moment to talk a little about the possible impact the downgrade of the credit rating will have on mortgage interest rates.

Mortgage rates normally run parallel to the country’s Treasury bonds. When many people are buying Treasury bonds, the return on those bonds decreases. If less people are interested in buying bonds, then the return on those bonds must increase, in order to draw more buyers. If bond returns increase or decrease, mortgage rates normally do the same.

Some experts feel that the downgrade in the country’s credit rating will cause people to see greater risk, and therefore be less likely to invest in US Treasury bonds. That would necessitate returns to push upward; any investor tends to seek higher returns, as compensation for the perceived greater risk. If that happens, mortgage rates will probably increase.

Others believe the exact opposite is likely to happen. If people think the US is struggling financially, they may question the entire world economy. If they do, there’s a possibility that they might still trust the US bonds over other investments. If that occurs, Treasury bond returns would decrease as demand increases. Mortgage interest rates may actually soften in this scenario.

Again, no one knows for sure what will happen. Rates could go up, go down or stay relatively unchanged. If you would like to know what interest rates are doing locally, contact me for a personalized quote.

If you’re thinking of buying or selling a home in Panama City Beach or Destin, the Veach Team is prepared to help you find the Florida home of your dreams. Contact us today, and let us show you why “Life is a Beach” here in beautiful Destin! And don’t forget to “LIKE” us on Facebook – we’d love to talk with you.

Posted in Buying Real Estate, Selling Real Estate, Uncategorized and tagged , , , , , , , , , , , , , , , , , .