Bernanke did not say anything about when the Fed might change its' path and begin to tighten credit. He stated that, when the economic growth happens, rates would need to be increased.
At the recent meeting with Congress, the Fed re-stated that it would discontinue the buying of mortgage backed securities, which has and end date of March 31. The buying of these securities had aided interest rates remaining low during this last year. Despite the fact that they will bring to a halt this purchasing, they do not presently intend to sell the securities that they bought. This may bring about an increase in interest rates.
The Mortgage Bankers Association expects that rates will increase slowly for the remainder of 2010 and continue going up during the next two years. However, should mortgage interest rates rise to the six percent level, which probably won't happen until 2011, it must be remembered that, at six percent or so, it is still a very reasonable rate, especially to those of us who remember interest rates of nineteen and twenty percent in the past. Rates at the six percent level should not impede a recovery of the housing market.
As a reminder, those of you who are considering buying a home and would like to take advantage of both the current low mortgage interest rates as well as the tax credits for home buyers, you must have a valid, signed contract by this coming April 30 and close escrow by June 30.
