How Horrible. Rates on the rise!

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Interest rates are on the rise. Over the past two weeks, rates for a 30 year fixed mortgage have risen half a point to their highest levels since the start of the summer. Don’t get me wrong, interest rates are still in the low 4’s. It’s not like we are talking about rates in the 6’s or 7’s, but why the sudden increase?

The main reason – good economic news, or at least news that is somewhat good, is finally available for stock traders and they are taking advantage of it! For example:

  • last week the job market added just over 150K jobs when the expectation was only 75K would be added.
  • retail sales data came out higher than expected from a recent report
  • traders are taking advantage of the perceived good news and stocks are enjoying the gains (which means money is flowing out of bonds and into stocks causing interest rates to rise)

In all honesty though, who are we fooling? Unemployment is still at 10%, and the economy isn’t back on its feet just yet. Until those are straightened out, don’t expect interest rates to permanently leave their historically low levels.

Interest rates have indeed been on the rise. While the trend isn’t likely to continue for too much longer, it does leave me with some mixed emotions. It feels wrong… almost evil if you will. It is hard to put it into words, so I’ll let Dr. Horrible (played by Neil Patrick Harris) explain it.

Anytime you can work Neil Patrick Harris into a post, you must do it!

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