Here’s an update from Narbik Karamian, BeneGroup, Inc. on what’s happening with loans.

Interest rates shot up quite drastically (by almost .25%) this morning (see attached interest rate movement graph) due to a weaker than expected 3 year treasury auction by the U.S. Treasury.

There has been a lot of movement (more upward than downward) in interest rates since early December 2010. Signs of recovery in the U.S. economy started taking more shape in December with better than expected consumer spending and confidence data during the holiday season, Overseas interest in buying more U.S treasuries during the European crisis with nations like Portugal, Ireland, Italy, Greece & Spain (also known as PIIGS nations), and strong U.S. corporate earnings in 2011 have contributed to the strengthening of the U.S. economy, in return causing interest rates to move upwards more rapidly than anticipated. The Feds QE2 (quantitative easing) program rolled out at the end of August, 2010 was intended to keep interest down as the economy improved but has come short to the activity in the stock market.

The yield on the 10 year treasury which is what interest rates are very closely connected to (mortgage rates move in the same direction as the yield on the 10 year treasury does), hit 3.5% last Thursday. This is somewhat a point of concern because 3.5% is considered to be a key level of resistance, meaning if it stays above that threshold, there is a good possibility of it moving higher causing mortgage rates to move higher even further.

See the graph below showing the movement in mortgage rates on the conforming lending limit (up to $417,000) as well as the jumbo conforming limit (between $417,000 and $729,750).

Interest Rate Movement Graph

You can contact Narbik for more information and to find out how much home you can afford.

Narbik Karamian
DRE Lic: 01372576
BeneGroup, Inc.
Cell: (408) 315-2834
Fax: (408) 395-7561