The biggest threat to low mortgage rates in 2011 is inflation

With the first quarter of 2011 now in the history books, what is the near term outlook for mortgage interest rates?   I think home mortgage rates will continue to move up as the threat of inflation becomes an ever present threat to the low rate mortgage market we have all become accustomed to.  How high will interest rates go in the near term is anyone’s guess, but it looks as if we might see the low 5% much sooner than we will see the low 4% rates again.    

 Yes we are in volatile economic times of late, with the threat of inflation and a possible Government shut down looming over the credit markets like a dark cloud.  This uncertainty has caused a near term spike in the mortgage rates, but what is the longer term outlook for 2011 and into 2012?    As economic growth surges ahead, so does the corresponding rate of inflation which is almost always a sign of higher interest rates to come.   So how high will mortgage home loan rates go in 2011 is anyone’s guess but if you are thinking of re-financing your home, now may be the ”last dance” so to speak for low home rates. 

Although current inflation rates stand at a modest 2.2% many economists are predicting rapid rates of inflation in the second half of 2011 and into 2012.  So if the inflation rate surges ahead to 4% annualized then we will probably see mortgage rates near 5.5% in the second half on 2011.   So now may be one of the last opportunities to lock in a low mortgage rate if you are purchasing a home or to get a refinance rate under 5% which is still an extremely attractive rate.  If you have good credit then there are many lenders out there who want your business. 

So dont hesitate if you are thinking of refinancing your home and always shop around for the best available rate.