Q. Moe, I’m really worried about mortgage interest rates.  I have read your articles in regards to the Federal Reserve pulling out of the mortgage backed security market and I agree with your theory that mortgage rates will be rising soon.  But, I also know how the markets are manipulated by media and do not follow immediately after market move like this.

Do you think interest rates will fall or will mortgage rates rise in the coming months? 

A. This simple answer is yes.  But you and I both know, when it comes to mortgage rates, it is not as simple as that. 

They seem to go up and down like the tides at your local beach. When there is word of good news, the markets go up, and when there is bad news, they go down.  When I was following the Federal Reserve and their decision to pull out of the mortgage market this past month, my research showed being that the media was not even reporting this major news at the time.  Hence, it had very little effect on the markets and investors when the Fed pulled out.

However, about a week or so after the Fed yanked the mortgage chord, there were some media mentions on Fox Business News and I believe CNBC.  Sure enough, rates begin to rise.  These media reports were quickly countered by paid experts, and what I jokingly would call paid puppets, who claimed that the Federal Reserves decision to pull out of the mortgage backed security market, would have little, 2to no effect on mortgage rates.

I thought to myself, “Who in their right mind was gonna buy these still toxic mortgages on Wall Street?”  But, as I’ve found out over my 38 years of life, is that in America there’s a sucker born every millisecond.  I still believe that even all these mortgage suckers will not be enough to fill the void that them Federal Reserve had filled, by buying trillions in mortgage backed securities over the last three years.

The facts are that no one can really predict what the markets are going to do.  You can research yourself to death and never really get the answers that you seek because this is really just a prediction.  That is what I’m giving you right now.  Ask someone else, and you may get a different answer.

  • My prediction is that the Federal Reserve’s exit from the home loan market will cause mortgage rates to rise over the coming year. 

There has already been noticeable up ticks in rates on many days over the last few weeks. Sure, mortgage rates may fall some days and go up on others, but ultimately the averages will rise indefinitely from the historic lows that we’ve experienced over the last few years.  There is no way that private investors can fill this gap.  Until I see evidence proving otherwise, I will stick by my theory and prediction.

Haven’t you learned that life is really just like gambling?  From buying a home, obtaining a mortgage, investing on Wall Street, asking a girl out on a date to speeding on the local freeway, these are all little gambles played out through our days on earth.

  • Locking in a mortgage is no different. It’s a gamble.

If it was me and I was looking to get a mortgage to refinance or purchase, I would lock in a rate as soon as possible in the coming months.  However, I do not believe that mortgage rates will rise very high and they will still still be very affordable in the coming years.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.