Will Mortgage Rates Blow Up?

There has been much talk lately about the Feds raising interest rates to fight off the potential risks of inflation from a recovering economy. As far as I can see, this is a mistake that will only exacerbate a problem that we have not yet solved.

While some of the Fed Governors continue to point to signs of a recovering economy, based on economic data, it doesn't take a rocket scientist to know that a significantly large portion of interest only and adjustable rate mortgage loans are coming due in the next 18 months. This is going to present a wave of more foreclosures and cause additional inventory on real estate market that is already full of supply.

The positive comments yesterday from the Feds regarding the potential extension of the Asset Purchase Program for Mortgage Backed Securities, was encouraging. I do hope that our Fed Insiders look at these practical matters and don't react to soon to 'interpretive data'.