Refinance or buy now | odds in favor of higher rates

Interest rates for 30-year, fixed-rate mortgages have increased from 4.9% to 5.6% in the last two weeks alone.

Yields on 10-year Treasury bonds have doubled in the last year--with no end in sight for further increases.

The Federal Government is overspending its resources this fiscal year alone by $2 trillion, will do virtually the same thing again next fiscal year, and will be running something like $1 trillion annual spending deficits as far as the eye can see.

The Federal Government already has a $13.4 trillion debt and an unfunded future liability whose present cost is already over an additional $100 trillion.

The Nation has a $10 trillion accumulated trade deficit which is growing at the rate of well over half a trillion additional dollars a year.

The Chinese and the Russians are already gagging on both our dollar and our Treasury securities.

What this should tell you is that interest rates (particularly long-term ones), inflation rates, and crucial commodity costs which trade in dollars (like oil) will all radically increase during the years ahead while the dollar's value will at the same time radically decrease.

While long-term mortgage rates are still low by historical standards, they (and the bond market on which they depend) have during the last two weeks begun a climb whose continuation may be irreversible.

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