Are Mortgage Rates Going Up Any Time Soon?
By: Staff

The Federal Reserve just one month ago surprised economists everywhere by cutting its key interest to nearly zero. The central bank's historic rate cut, in concert with its decision to buy up to $500 billion in mortgage-backed securities to help shore up the housing market, has gone a long way to lower mortgage rates across the country.

Interest rates have continued to fall, with the 30-year fixed rate mortgage now averaging about 5.03% nationally.

If you're looking to take advantage of the current low rates -- either through refinancing an existing mortgage or taking out a new one with the purchase of a new home -- you may be wondering how long you have before interest rates start climbing again.

Tony Crescenzi, an interest-rate expert who blogs for, believes you've got some time. He expects the trend in declining interest rates to continue through most of the year.

Below, in its entirety, is the reasoning Crescenzi lays out in his blog. He made the post to his blog after he listened to the policy speech delivered by the chairman of the Federal Reserve Bank Tuesday.

To find rate offers in your area, go to and enter your ZIP code.

Rate Hike Unlikely

1/13/2009 2:57 PM EST

One of the most important messages in the speech delivered earlier today by Federal Reserve Chairman Ben Bernanke is the idea that the Fed will keep the federal funds rate unusually low for quite some time. Bernanke surely meant to signal as much when he reiterated the Fed's commitment to keeping rates low in his speech.

Bernanke noted the importance of communicating the message, which he said could help exert downward pressure on long-term interest rates (through the expectations process by which long-term rates are influenced). Bernanke's speech therefore looks likely to reinforce the current trend in interest rates, including the migration of money into riskier assets such as corporate bonds, municipal bonds, mortgage-backed securities and the asset-backed securities market.

With respect to expectations on the fed funds rate, the market is priced for the rate to be at 0.295% in July, down 2 basis points from yesterday's pricing. For the end of 2009, the market is priced for a rate of about 0.60%, a level that suggests the Fed might bump the funds rate up 25 basis points by year's end.

While possible and consistent with the Fed's own view that the funds rate will be kept "unusually low," expectations for rate hikes are likely to be misplaced for a while.

Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market, first published in 1978 by Marcia Stigum, and The Strategic Bond Investor . At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.

Sign Up Now for Our FREE Newsletter

NEW: sbup Credit Center


Looking for your credit score?  It's quick and easy with our Credit Center powered by Experian!

  • Free Credit Score
  • Credit Articles
  • Credit Reports

Get your score and save money today!

US Rate Map - National Mortgage APY

Roll over states to see best rates.
Lower Rates Higher Rates

This illustration shows rates based on all terms and locations of a particular state. Products may not be offered by all institutions. Individual institutions determine the availability and required qualifications of their products. Product restrictions may apply.


Calculator Access our Savings, Mortgage, Auto Loan and Personal Finance Tools here.