Interest Rates Will Start Increasing in 2010

The Fed’s Mortgage Backed Security (MBS) purchase program ends on March 31, 2010.  This purchase program is what has kept mortgage rates so low for the better part of 2009 and once the Fed stops purchasing MBSs  the demand will drop.  Since the supply of MBSs is still high, this will have a downward affect on bond prices which, in turn, will make home mortgage rates rise.

This will affect the purchasing power of home buyers.

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Jennifer Wollmann

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