As the Economy Improves, Interest Rates will Rise

More and more I am reading and hearing this – as the economy improves and the financial institutions return to more solid ground, mortgage interest rates are going to jump. 8% to 9% in 2010 are what most seem to expect.

An 8% mortgage is an average rate historically, though many homebuyers of the last 10 years seem to expect rates to be at 6% or below. Today, interest rates remain at historic lows as the government exerts pressure to keep them low to help the housing industry and the economy recover.

I sat down with Mike Tacconi of National City Mortgage to get his take on the situation. Mike is a former president of the California Mortgage Bankers Association and vice-president of the Realtors Marketing Association in Danville/San Ramon CA.

Today's low interest rates are fueling a frenzy in refinancing. If the economy improves over the next 12 months, home buyers are probably looking at one of the most favorable home buying periods in the last several decades.

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