The mortgage rates are dependent on many things and they tend to vary along with the time but due to the rise in inflation they usually tend to increase. This year is also the same old story with the arrival of this year spring the mortgage rates also starts increasing which eventually effect a consumer a lot like making every thing much more expensive to purchase on credit. In this regard say thanks to the development of economy. When the economy goes in recession in the fall of 2008 the economies got crushed to which the federal reserves acted and pumped a huge amount of money into the economy. In a bid where they try to save all the huge banks which were all become insolvent all because of the toxic mortgage backed securities. These vast holdings become a trap for them. They got money at zero percent interest. This policy by government said to be saved the banks and also business become profitable as they are getting money without any interest. So they can invest once again in the securities and can have a nice profitable return on those securities. In the mean time congress also pass a resolution of huge expenditure in order to stimulate the economy which results in recovering economy but on the cost of frightening accumulation of debts. The first person to realize that is fed chairman Ben bernanke who sounded the alarm in those warring words that these increasing debts will cause eventually snuff on the economic recovery. As in the last auction of U.S. bonds it is found that there are a few takers which force the treasury to offer higher rate of interest hence resulted in increasing the mortgage rates which are now heading further higher. Reports say that average 30 year mortgage rate climbed from 5 to 5.2 percent which is the highest rate in the 2010. For some one not having enough knowledge of mortgage rates 5.2 percent will be a very low rate and .2 is very small change in mortgage rates. But the people who purchased their houses have in mind the double digit of mortgage interest rate. But keep in mind that the houses in that era are lot cheaper than today. For example if we take that a house owner who is paying 12% on a $100000, mortgage had a monthly payment of $1029 Where as in today’s world the only 5.2% on $200000 mortgage would have a payment of $1098, with much higher home prices, so this is a necessity for a person that the rates should be kept on that low percentage to make the payment affordable for him. If the rates will keep on increasing and eventually goes up to 6 percentages at the end of 2010 then it will be very difficult for a normal person to afford a house and also that’s a bad news for the person who wants to sell his house and the person who want to buy a house also. Since the houses may lose their value more.
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