Proof Mortgage Rates Are Still Ridiculously Cheap

If you're kicking yourself for not locking in a lower mortgage rate last year, then you need to read this.

Mar 23, 2014 at 12:30PM


Even though mortgage rates have increased since the middle of last year, they're still ridiculously cheap from a historical perspective.

The going rate for a 30-year fixed rate mortgage is 4.32%, according to Freddie Mac. While that's almost a full percentage point higher than 2012's bottom, it's roughly half the 40-year average of 8.55%.

My point here is mortgage rates are still extremely cheap. On top of this, they're bound to go up -- or, at least, let's hope that's the case (if they don't, it means the economy is still sputtering along).


In the middle of last week, the Federal Reserve reconfirmed its commitment to reducing its monthly purchases of Treasuries and agency mortgage-backed securities. According to its official announcement:

Beginning in April, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $25 billion per month rather than $30 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $30 billion per month rather than $35 billion per month

While this may seem esoteric and innocuous, it's anything but that from an interest rate standpoint.

The central bank's purchases of long-term bonds are the precise reason mortgage rates are so low. Consequently, any reduction in these purchases, which is precisely what the Fed is engineering, will almost necessarily lead to higher borrowing costs.

When will rates increase and how much further will they go? It's impossible to say. But it'll happen sooner rather than later. And it's for this reason that, if you're thinking about buying a house, you should spend less time lamenting the trend and more time taking advantage of it.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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