Interest Rate Forecast For 2008

Interest rate forecast and predicting is an art and a science and surely not for the faint of heart. If you trade bonds or are interested in investing for long term you will want to know the direction of interest rates.

As mortgage defaults and foreclosures are on the rise, I thought it a good time to look at what the likely direction of long term interest rates will be in the near future. Not so much as the exact rate, as the direction, although we will look at what it will likely cost you to get a mortgage in the near future. For the last quarter of 2008 we expect long term interest rates on the 30 year T Bond Futures contract to move sideways to down.

While home mortgage interest rates will likely move lower starting in August.

There are many major investment advisors who are looking for rates to increase for the next year or so. But they have been forecasting much higher rates for the last year. What they fail to look at is history and history shows the 60 year cycle low to be ahead of us.

There are reports that before this credit problem is solved the Fed will have created over 4 Trillion new dollars. This is what those advisors are seeing. Along with the fact that when you look a the inflation numbers, figured the old fashion way, the Fed is creating money at over 16 percent a year. Evenually this will work its way into a higher interest rate forecast, but not for 2008.