The blue line is the interest rates and the red is the 10 year yield. These are statistics from 1964 to 2000.
CNNMoney reports that the trend towards far higher rates is already beginning: Since March, the yield on the 10-year treasure has jumped from 2.5% to 3.8%. The 10-year treasury yield is an indicator of interest rates. As the yield goes up so do the interest rates.
CNNMoney reports that big rate increases are inevitable. The Fed would start raising rates within a FEW MONTHS to stem the looming inflation. One prediction is that the 10-year yields of around 6%-8%.
What does this mean for you? If rates are around 5.5% with a yield of 3.8% then if the yield goes to 8% you are looking at over 10% interest rates.
Those of you who are concerned about whether to do a conforming rate or a non- conforming rate in trying to save .25% interest rate you may be shooting yourself in the foot. In the long run you maybe looking at many points of increase just for a conforming loan.
I don't like to use "mushroom cloud" techniques but this data shows that now is the absolute best time to buy before you get priced totally out the market for years to come. Also, with the tax credit it is looking very attractive to buy now.
