Arn Cenedella

Where are interest rates headed?

Wall Street Journal says mortgage rates may increase from about 5% to 6% in the next year.

I don’t like to get into the “prediction” game because no one really knows.

Many act like they can see the future but the only thing we know for sure is what’s happening right now. When providing counsel to my clients, we do brain-storm about various scenarios. But at the end of the day, everyone tries to make the right decision based on the best information available at the time. I don’t see any other way to do it.

Certainly, one could argue that rates are pretty darn low right now so therefore logically they only can go up. Others will say economy is too weak for inflationary pressures to get stronger so rates probably won’t do much.

When I first got into the real estate business, my father said and I quote “Anytime rates are in single digits, that’s a good loan”. That was back in 1978 so 5% would have been tough to imagine way back then.

When I purchased my first home in East Palo Alto, I paid 11.75% for my 30 year fixed rate loan.  I closed about a month before rates started their upward zoom towards 16% in the early 1980s.

If you are in the market to buy, I believe there is some reason to try to lock in a great rate now. That being said, don’t rush out to buy just because rates may be at their lowest point.

This entry was posted on Monday, March 22nd, 2010 at 2:16 pm and is filed under Credit Information, Real Estate Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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