Which Way are Interest Rates Headed?

June 10, 2009
By Kevin Cafferty

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It's on the mind of consumers everywhere - those looking to refinance their mortgages, those looking to buy houses, and those looking for better rates on their deposit accounts: Which way are the interest rates headed?

According to a Bloomberg article, "U.S. mortgage applications fell last week to the lowest level since February as a jump in borrowing costs discouraged refinancing and signaled that Federal Reserve Chairman Ben S. Bernanke’s efforts to cap rates is stalling."

The San Francisco Chronicle (in the Net Worth column) also touches on the issue: "The funny thing is, investors can't decide which worries them most: that rates will rise too quickly and choke off a recovery, that rates will rise too slowly to offset the stimulus that has been poured into the economy and we'll end up with hyperinflation or that we will have both - a weak economy and high inflation."

And the Wall Street Journal is also weighing in: "Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That's more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers' expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries."