Higher Mortgage Rates Seem to Be on the Horizon for St Louis Mortgage Owners

To the shock of most mortgage and financial analysts, the Fed announced that they would stop buying mortgage-backed securities due to the inherit risks involved. This new turn cannot be good news to an economy that is already reeling from 18 months of fiscal greed.

The unexpected change of opinion seems to be conclusive that mortgage rates will invariably go up much sooner than originally expected. As far as our economy is concern, when it rains bad news, it certainly floods the real estate and banking industry.

Most realized that this was just another bailout program which became the largest single injection of cash into this financial crisis.

As the Fed moves to end these purchases, it doesn’t seem likely that the central bank will start selling them to private investors anytime soon although this may prove to be a good sound decision.

The bottom line is, it doesn’t really matter it the Fed sells the mortgages or not, when the cash flow stops and the mortgage-backed securities are no longer bought, this will make the mortgage rates rise.

How high will they go. Many feel at least a quarter to half percentage point. Opinions vary saying these very interest rates may end up going higher.

Now when you add the potential higher rates into the equation along with the April 30th deadline for the tax credit, this may spell quite a financial and real estate catastrophe for 2010.

Many contend that the monetary aid to this faltering economy helped to end the free falling home prices. One such avid supporter of this view is Dean Baker, the co-director of the Center for Economic and Policy Research.

But what is truly alarming is what this man predicts. Number one, with no further purchasing of these mortgages, this may very well cause home values to once again drop. And number two, he feels that interest rates may indeed go up a full percentage point for home buyers in the months to come.

Learn more about St Louis lending choices. Stop by Floyd J. Tapia’s site where you can find out all about the St Louis home loan experts and what they can do for you. Call them at 877-334-0210 for your refinance needs.