Federal Reserve Chairman Ben Bernanke, in his first economic remarks in two months, hinted that no more interest rate cuts were in the pipeline. This validated the widely held belief that the Fed has moved to the sidelines. All eyes have now shifted to inflation, with Bernanke and other Fed officials increasingly focusing their comments in that direction. In recent weeks, building inflation pressures and concerns about economic growth have been playing tug-of-war with mortgage rates, and this continues to be the case. Fixed mortgage rates are closely related to yields on long-term government bonds, and both are heavily influenced by the outlook for the economy and inflation.
Mortgage rates have been on a wild ride since the beginning of the year. The average 30-year fixed mortgage rate was as low as 5.57 percent in January, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. In February, the average 30-year fixed rate got as high as 6.41 percent, which meant the same $200,000 loan would have carried a monthly payment of $1,252.32. Today, with the average rate at 6.26 percent, a $200,000 loan would mean a monthly payment of $1,232.74.
