It is generally assumed that rates will continue to march up throughout 2011, as the economy continues to improve. And this is why, once again, we encourage people to lock in their fixed-rate loans now (and to buy now).
The Fed is trying to push rates down, but its efforts are having the opposite effect (The Fed’s QEII policy pushed rates UP). This proves that the Fed and the Gov’t cannot just dictate rates at any level, as many people mistakenly believe.
There are events, however, that could push rates down significantly. One of these would be the collapse of Spain’s economy. Spain’s overall economy is larger than Ireland’s, Portugal’s and Greece’s COMBINED. And Spain’s banking system is extremely weak and on the brink of collapse. An upheaval in Spain would send shutters of fear throughout the financial world, and investors would flood into the Safe Haven of US Treasuries, pushing rates down sharply.
If you are a borrower or buyer waiting to lock in your loan, the pain in Spain could be your gain. :)
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