What are interest rates doing? : Rooftop Views

Rooftop Views

What are interest rates doing?

We hear it every day. Interest rates are going up, interest rates are going down. What is the scoop?

Mortgage interest rates are a function of what the FED does with short term interest rates because they effect the bond market. And most mortgage rates are a direct result of where the bond market is.

So with the FED continuing to raise rates, mortgage rates follow. Remember, if the economy is good, mortgage rates will go down. If the economy is not so good, mortgage interest rates will go up.

Mortgage interest rates are definitely going up. About a point in the past 10-12 months. That means about $60 per month on a $100,000 loan. Since the average price of a home in the Denver metro area is around $250,000, that means an increase of about $150 per month.

A lot of Buyers were having difficulty qualifying for loans at the 5.5% rate. So they got adjustable rate mortgages that started out with a lower interest rate. Now those loans have started to adjust, and since almost all of them adjust based on where the current mortgage interest rate is, they have increased a lot. Since Buyers were having difficulty at the lower rate, you can imagine how hard it is for them to make payments at the new, higher, rate.

It's no wonder Colorado is still leading the nation in foreclosures. But we think the rest of the country won't be far behind.