Lincoln Interest Rates
Mortgage loan interest rates in Lincoln, NE are constantly changing. Like most other financial products, mortgages can be traded on a secondary market. This is the exchange where lenders are able to sell their existing loans to investors. When a lender sells their loans, this frees up capital in order for them to make more loans to borrowers. In return, the investor is able to earn a certain percentage of their money over the life of the loan.
Historically, low-interest rates are typically accompanied by a weak and slumping economy. The recent two-year run of record-low rates was accompanied by COVID-19. This is because the investors will be searching for a safe place for their money rather than in stocks or other types of bonds. On the reverse side of this, if the economy is expanding and investor confidence is high, interest rates typically increase. The interest rates have to increase to give investors an incentive to invest their money.
One of the biggest threats to low-interest rates is also inflation. As seen throughout 2022, rising inflation can cause interest rates to rise very quickly!
During the last several years, it has been even more difficult to predict the direction of rates. The Federal Reserve and Government have been buying bonds and mortgage-backed securities in order to keep interest rates low and hopefully stimulate the economy. Interest rates were near or at historic lows for several years now. Beginning in 2022, the Federal Reserve announced they are easing their purchase of mortgage-backed securities and will draw down their balance sheet. This occurred at the same time inflation was starting to climb.