This past Thursday the long term outlook of the United State’s debt was lowered to negative from stable by the credit rating agency, Standard & Poor. This wasn’t a downgrade of the debt rating of the U.S. but rather the “Outlook” for the future.
S&P decided to lower their outlook on the county’s debt because as usual politicians in Washinton can’t decide on a budget for this year and future budgets. As a result the long term outlook on interest rates will be higher. Rates on mortgages, loans, and everything else.
So I believe the future outlook for conforming 30 year mortgage rates will be over 5.50 percent by the end of 2011. 30 year jumbo rates will be around 6.00 percent.
The longer term outlook for rates is even bleaker. You can except conforming 30 year rates to get as high as 7 percent to 8 percent or even higher if inflation