Another issue at hand is the fact that the Federal Reserve Bank continues to buy up mortgage backed securities. By doing this, Ben Bernanke must print more money which is proves to be a strong argument that inflation will get out of control in the next few years. Making an interest rate prediction in this economic environment is very difficult because if the government runs out of bullets to slow overall rates, we could see a sling shot effect in rates.
The government has been attempting to put a cap on the 10 year treasury rate for quite some time, but eventually the market is going to set interest rates. When the government slows their involvement, there is going to be a coil effect with the treasury market. We are likely to see the treasury rate to move full percentage points in a very short period of time.
If you have been considering getting a refinance, it might be time to go ahead and do it because the 10 year is sitting at the support level of the 50 day moving average and could move up very quickly which could push mortgage rates above 6%.
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