Recently US Home Mortgage rates have started their 'up' movement.This week it reached 5.95%. Till about 2 weeks ago the rate was below 5% with 1 point. Now it is almost 6% with 1 point. Sometimes it is better for consumer that Govt. intervenes and regulates. It's myth that Markets will take care and will correct itself. Between speculators and Greedy players markets and rates will go up and down without any sound fundamental reasons. makets do not behave rationally and for serious matter like Home Mortgage Rates,Regulation by govt.is must as it affects consumer for a long time. In U.S. loan application processing takes 2-3 weeks,if rates are going to change by a Point than its very unfair to Borrower as he will get stuck with this high rate for 30 Yrs.
This is biggest dilemma in Free market situation. If there are no regulation and absolute freedom is granted than there will be repetition of what happened last year. Its prudent to set baseline regulations and fixed interest rates for certain period as is done in India. then both Lender and Borrower know what to expect and there will be more stability. With fluctuating Interest rates Lenders and borrowers are dissatisfied when rates fluctuate widely. Besides it creates negative effect in markets as has happened in US in last 2 weeks. For last 2 weeks Lenders were not enthusiastic to lend in expectation of higher rates.Now borrowers have stopped borrowing cause rates have gone up. They will wait for rates to come down and the momentum achieved by Obama's plan will be lost