The bond market is performing well today and rates are better based on a beguine CPI report. Inflation is basically at zero with a year over year decline of 2.1% – the lowest rate since 1950. Maybe more important than that, for the future of low rates, is the fact that the Fed purchased another $42b in treasuries this past week. The Fed has only committed to buy treasuries through October of this year. (As a Realtor, I am telling my clients it is not the time to wait on mortgage rates in hopes that they’ll go lower.) Once the Fed stops buying them, Treasuries may very well have to raise prices to attract other buyers. It could very well could mean higher rates this fall into winter. On top of that the $8000 stimulus money is scheduled to end on December 1st. It may be worthwhile to suggest to clients that these record low rates may not last as long as we hope. I personally believe mortgage rates still have to stay low for quite awhile but the low rates we have today may be limited.
