According to an article on CNBC(1) rates of all types, including mortgage rates, will stay low at least until the middle of 2014. The jobs report released last Friday showed a weak expansion in the economy with 162,000 new jobs created.Mortgage Rates to remain low Besides that number being too low to help a trudging economy get on the fast track, the bulk of the jobs were in the lower paying services and hospitality sectors.

 

The author writes that many investors had predicted long ago that the Fed’s bond-buying strategy, called quantitative easing, would end somewhere around September yet continued weak job growth might mean the stimulus will continue into until the unemployment rate hits a 6.5 percent target. Many are now saying that quantitative easing won’t stop until sometime next year, and definitely not in 2013.

This means rates should stay low for not only real estate investors but for all borrowers from credit cards to automobile loans. That’s good news, right? Sure, for those borrowing money. But not so much for others.

If you’re a retiree or soon will be, it’s not good news if you’re relying on interest income. Returns for rate sensitive investments such as certificates of deposit or money market funds are meager at best in today’s environment. Mutual funds are doing no better and for those retirees who are still active in the stock market are risking their retirement funds as they seek better returns.

Low rates are an indication of a poor economy. The Fed steers rates lower in an effort to help boost the economy, stimulate buying and business investment. So far, there’s no proof that the current quantitavite easing campaign is actually working. 162,000 jobs?

While mortgage companies and the loan officers who work for them regularly cheer when rates are low, and they’ve been cheering steadily for a few years now, it’s not really good news for the entire economy. Low rates mean the economy is still slumbering, the unemployment rate is high and job creation is week. We all want low rates, but in the broader picture, we’d really like to see rates gradually rise. When they do, the economy is truly on the mend.

(1) Matthew Belvedere, CNBC Squawk Box, August 5, 2013