Bernanke Says Mortgage Rates Headed Higher: Ignore Him


Federal Reserve Chairman Ben Bernanke recently warned of rising mortgage rates. But when you take a closer look at the testimony, he's referring to a couple years down the road -- probably closer to 2012 than 2010.

In his April 27 testimony before President Obama's federal deficit committee, Bernanke expressed concern about the annual deficit through 2020, which could lead to a ratio of federal debt to GDP of 70 percent by 2012. And that could start to raise concerns among investors.

Under a worst-case scenario: If tax cuts are extended, the deficit by the end of 2020 could be 9 percent of GDP and the federal debt would "balloon to more than 100% of GDP." At that point the U.S. would definitely be paying higher interest rates to borrow money and that would likely lead to higher mortgage rates.

But remember, that's not going to happen anytime soon.