Will historically low interest rates continue?

If you follow any media source that discusses the financial world, you are likely aware that interest rates are at historic lows. Much of this is driven by how the Federal Reserve acts. Since December of 2008, Ben Bernanke and the Federal Reserve have kept the key federal funds rate at 0-.25%. The federal funds rate has a major impact throughout the financial world...but also affects mortgage rates.

The common theory in the real estate industry is that the Federal Reserve can't keep their rate at or near 0% for much longer. Otherwise, things like inflation or speculative investing start to creep in because obtaining a loan is so affordable. Many experts have thought the Fed would increase their rate in June or July, thus causing an upward effect on mortgage rates. When a mortgage rate increases even 1/2 a percent, this significantly affects a home buyers purchase power.

This morning, Ben Bernanke said that the Federal Reserve must commit to keeping key interest rate at or near zero in order to continue the nation's economic recovery. He said they must do this for an "extended period." No mention of specific time frames. So for those potential home buyers still awake and reading this post...pay attention to the news coming from our fearless Fed chief (Bernanke) because his decisions will likely have an impact on your ability to buy what you want!