Why I think Rates Will Go UP!

So the Fed announced that they are thinkin’ about maybe lowerin’ their rate at the end of the month. That’s nice.

Here’s My Concern With It…  They are lowering rates because the housing market is still tanking in many areas of the country (not mine thank goodness!) and that means fewer taxes collected… it’s a BIG DEAL, don’t get me wrong.

But just because the Fed lowers by .75%… Do not get sucked into believing that mortgage interest rates will go below 5.5%! How soon we forget! FANNIE AND FREDDIE are starting to add their “special fees” to borrowers with less than 680 credit score!  Once priced into the loan – rates for the MAJORITY OF BORROWERS will be 1% of interest OR MORE higher than the going rate!

ADD TO THAT the fact that FICO is changing it’s model!  My personal opinion is that the scores are not going to go HIGHER with the new system…

So effectively we NEED more than the little “sprinkle” the FED is likely to give us for rates to REALLY go much lower!!!  We will REALLY need Fed Funds rates at 2 o 2.5% in order to TRULY help the economy!