Ken's Naperville Real Estate Blog : WHY ARE MORTGAGE RATES SO LOW?


Why are mortgage rates so low?

It doesn't make sense to me.

If I were a bank that was losing tons of money from my loans to home buyers...

I would need to charge a lot before I lent out any more money to home buyers.

Wouldn't you?

So why are mortgage rates so low?

Seems they should be at 20%, not 5%.

What do you think?


A Realtor you can trust.

Comment balloon 13 commentsKen Tracy • February 20 2009 06:22PM


They need to be low given the down economy!


Portsmouth NH Real Estate

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) over 9 years ago

Ken- Rates are low for a few reasons that I can think of.

  • The rate to borrow money for banks (discount rate) is low so they have the same margin loaning money at 5% as at 15%
  • Banks only make money when they loan money. If they do not loan they do not make a profit. Keeping rates low encourages people to borrow. Even in difficult economic times
  • If rates were high banks would be held in even higher disregard. Think positive PR.

I'm not an economist so I really cannot give you a more factual answer but my anwsers sum it up for my way of thinking. =)




Posted by Scott Cowan (RE/MAX Professionals) over 9 years ago

Ken, I have read analyst's that say interest rates will be 8% by the end of the year.

I remember my Father having to put 20% down on a house with a 17% interest rate in the early 80's. He did it. A lot of people did. Housing prices skyrocketed and he sold for profit.

We have been here before. We will break out again.

Posted by David Phelps (The Roofing Company, Inc.) over 9 years ago

Hi Scott, David, and Patricia.  Thanks for stopping by.

Everything goes in cycles. 

But the low interest rates...

On mortgages?

Seems unnatural!

Thanks again,


Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

Seems they should be at 20%, not 5%.


Hey Ken,

Let's not give 'em any ideas!!!  Okay?  :)

Posted by Bruce Brockmeier, Coached By Crouch (Internet Marketing Consultant to REALTORS®) over 9 years ago

Ken - The President wants to keep rates low, because it is what people want... right?

Posted by Debbie Summers (Charles Rutenberg Realty ) over 9 years ago

The banks are borrowing from the feds for next to nothing, so in turn they should be lending at low rates...right?  Is this a trick questions? :-)

Posted by Simon Mills (Mills Realty) over 9 years ago

Anything it takes to get the loans going again!

Posted by Paula Swayne, Realtor-Land Park, East Sac & Curtis Park -Dunniga (Dunnigan, Realtors, Sacramento (916) 425-9715) over 9 years ago

Hi Ken... I will try to apply logic to the mortgage business when the mortgage companies stop denying short sales so that they can foreclose and sell the properties for less money as REO sales.  Until then it's futile to question what they do!

Posted by Steve Shatsky over 9 years ago

Hi Steve, Paula, Simon, Debbie, and Bruce.

Thanks for reading.

No matter what I was borrowing for, I would charge more than 5 % given that I am being stuck with all these homes...

I like low rates, I just would not charge them right now...

Thanks again,


Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

It's all part of a CONSPIRACY, Ken. We are just the "little people".

(I am totally kidding!)

But seriously, if you ever wanted to buy and have the means to make it happen, NOW is the time to do it!

Posted by Teresa K. Nelson (Windermere Real Estate/HLC) over 9 years ago

Why can't they charge higher rates for people with worse credit or that put less down?  I would.  Unless there was a government agency that encouraged me to do otherwise.

Posted by Rich over 9 years ago

Hi Teresa and Rich.  Thanks for reading.

They do charge higher rates for bad credit, but I wouldn't lend anyone money for a home at 5%.

If home prices drop, they are left holding the bag.

It is a conspiracy!


Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 9 years ago

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