Mortgage Rates climb as Economy Improves

Its a general fact that good economic news is bad for mortgage rates. Bad economic news is good for rates.

The lower the interest rate, the more home you get for your money. The higher the rates, the higher the ultimate cost of the home.

This is why economic news that affects interest rates impacts the real estate market. This week looks like a bad one for the bond and mortgage markets. Treasury notes and mortgage rates have increased in the past month as the economic recovery is thought to be on track for a solid 2010.

Major inflation is on its way with the increasing realization of the Treasury borrowing to fund what is expected to be a budget deficit of $1.8T. Thought mortgage rates are very likely head higher in 2010, one of the best investments against inflation is traditionally real estate. So the good news is the economic recovery and the appeal of real estate to hedge inflation. The bad news is, the days of the 5% mortgage are disappearing.

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