Home mortgage loan rates have been quite steady lately moving between 5.1% and 5.4%. This is quite unusual when the 10 year treasury rate yield has seen a drastic increase from 3.3% all the way up to 3.7%. With a move like this, one would think that 30 year fixed mortgage rates would be over 5.5%. That has not been the case and it will be interesting to see if this disconnect continues as the weeks move forward.
It is highly unlikely that both mortgage rates and the 10 year yield will move in opposite directions. Eventually one will move in the same direction as the other. If I had to guess, I would guess that mortgage rates would move higher as the 10 year yield has been a strong uptrend since the beginning of 2009. This uptrend was almost broken a few weeks ago when the Federal Reserve Bank announced that they were going to buy back huge amounts of US debt, but the uptrend remained intact even after the speech by Bernanke.
With this knowledge, it is a good idea to go ahead and complete the mortgage application you have been hesitant about. If you wait a few months or even a few days, you could see mortgage rates above 6% which would almost negate the reason to refinance at this point. Arm yourself with knowledge of the overall mortgage market and make sure to get the low mortgage rate that you desire.
Last week I pointed out that refinance mortgage rates were likely to go higher because the 10 year treasury rate yield had a 10% move to the upside. At the beginning of this week, we saw a slight pull back in the 10 year yield, but it looks as if support has held and the yield is moving higher. The 10 year treasury rate yield currently sits at 3.55% with little resistence all the way up to 4%. If the yield reaches 4% you can be rest assured that mortgage interest rates will get close to 6%.
If you have been waiting for mortgage rates to drop below 5% you might have waited a little too long. Now that the uptrend of the 10 year yield remains intact, it is likely that the 30 year fixed mortgage rate is not going to fall below 5% anytime in the near future. It is advisable to go ahead and get that mortgage application in as soon as possible because if you wait a few months or possibly even a few weeks, you could see mortgage rates in excess of 6%.
Before deciding to go through the refinance or first time home buyer process, I would edcuate myself on the current mortgage market. There is a great article on mortgage rate trends located at Subprime Blogger if you are interested. They update their mortgage rate trends article every Monday, Wednesday and Friday.
Getting low home mortgage rates on a refinance is very important. Low interest rates could save you hundreds of dollars a month on a mortgage payment. Refinance rates are currently moving higher so now might be the time to get that mortgage application in. The 10 year treasury rate yield has moved up significantly in the last week so we can expect to see much higher mortgage rates next week. The 10 year yield has moved up over 10% this week which is very bad news for the idea of lower mortgage rates.
When attempting to get a low refinance rate it is important to make sure your credit score is clean. You would be surprised at home many people have inaccurate information on their credit scores. The only way to know what is on your score is to actually purchase one. You can get a good credit score from Experian.com for under $20 and it is well worth it. If you have any disputes on your score, it is advisable to address them now rather than wait. One mistake on your credit score could end up costing you a full percentage point on your refinance home mortgage rate.
Now is the time to get out there and go through with the refinance process. If you have been debating it in the past it is suggested to do it now. If you wait too long, you could see mortgage rates at 6.5% or above. Many home owners would not even benefit from a refinance if this is the case. Make sure to do your research and educate yourself on the current housing market and get out there and get a low refinance interest rate!
Getting a fixed interest mortgage is something that many home owners prefer to do because of the security. With a fixed interest mortgage, you know how much you are going to be paying each month until the home loan expires. With an adjustable rate mortage (ARM), your mortgage rate adjusts at different periods and the amount of your mortgage payment could shoot up. You are aware of these dates when you sign the home loan contract, but few people keep up with the “reset” dates.
Part of the reason for the Subprime mortgage crisis was the resetting of adjustable rate mortgages. Many home owners felt that they could just refinance at any time, get the extra money from the increase in their homes value, and use that money for other things. All the while, they could refinance the ARM into another ARM. This works out great if the value of your home continues to appreciate. If the value of your home does not appreciate, you are in big trouble. This is exactly what started happening in 2007 when the mortgage collapse began.
When home owners went to refinance their ARM at a lower rate they found out that the refinance appraisal came back lower than expected. Some were ever lower than the amount they bought the house. Mortgage lenders would not refinance a house that is underwater. They were also unwilling to refinance, at a low mortgage rate, a home decreasing in value. This meant that these home owners were stuck with the reset and they had to make the higher mortgage payment. When the mortgage payment rose as much as several hundred dollars a month, many of these home owners could not pay the bills and a foreclosure followed.
This situation would not happen with a fixed interest mortgage. With a fixed interest mortgage, you do not have to worry about any resets taking place. Each month you will be charged the same amount of interest. If you signed a 30 year fixed rate mortgage at a 5.5% interest rate, that will be the interest rate for the life of the loan. This is the exact reason why some home owners feel that a fixed interest mortgage is much better than an ARM.
Getting a fixed rate home loan with a low mortgage rate can save you a ton of money over your lifetime. By just saving a full percentage point on your home loan, you could save up to hundreds of dollars each month on a monthly mortgage payment. One of the most often asked questions in the mortgage market is “how do I get a low mortgage rate for my home loan?” Well, the old say is time is everything. This is not the absolute truth, but it is very important when it comes to getting a low mortgage rate.
I think we all have friends or family members who got an extremely low mortgage rate in March or April. I have several friends that refinanced around 4.5%. This is not the case today as average mortgage rates hover around 5.2%. Historically speaking, 5.2% is still very low and is nothing to shake a stick at. Many people are wondering if mortgage rates are going to go lower or higher in the near future. No one can predict the future, but it seems like the actions of the government are not working very well to keep mortgage rates low.
If the work of the Federal Reserve Bank does not keep mortgage rates below 6%, it is very possible that we will see much higher mortgage rates in the next few years. If this is the case, 5.2% sounds VERY good. Although there is a possibility that overall rates could go lower, it is very difficult to pass up current mortgage rates. If you have been considering getting your first home loan or a refinance of your current loan, now might be one of the best times to take action. There are many interest resources available so don’t let this opportunity pass you by.
There is a great article at Subprime Blogger about Interest Rate History. From the article:
Overall, interest rate history shows that low mortgage rates are definitely ahead of us. If you have been considering refinancing, now is the time to start doing the research so you will be ready when mortgage rates go below 5%. If you aren’t willing to take the risk of waiting, now is also a great time to get a refinance. There is nothing wrong with refinancing at a rate near 5%.
It is going to be very interesting to see if this is the case. I think it will greatly help the housing market and overall economy if interest rates do go under 5% but I am not sure it is extremely likely. Some of my good friends feel the current interest rate chart has rolled over and we have put a bottom in overall mortgage rates. They basically feel that we are going to see mortgage rates move sideways before heading higher.
I truly hope this does not happen, but there is a good chance. Several analysts on CNBC and Fox Business have made the statement that mortgage rates are going to go higher. If mortgage rates do go higher, what do you think will happen to the housing market? Will it push prices low enough to bottom out the market? Will we see a total disaster causing home prices to decline over 50% in most major cities? What is your opinion?
We currently find the 10 year treasury rate at the bottom of an upward trend channel. Not only is it at the bottom of the trend channel, it is also extremely close to the 50 day moving average would should serve as support also. Unless the government does something to send the 10 year lower, it looks as if the selloff will end in the next few weeks. If supoort does how, look for the 10 year treasury rate to work its way back up to 4% which would mean mortgage rates would move higher towards 6%.
While this is highly likely to happen there is also a scenario in which the government would sink more money into mortgage backed securities and auction off a ton of treasury bonds which would send the 10 year treasury rate sinking through its 50 day moving average. It would not surprise me at all if we saw an announcement in the next few days about this exact situation. Ben Bernanke and Timothy Geithner are working extremely hard to hold average mortgage rates down so this would not be out of the question.
Last week, President Obama announced a major change to the Making Home Affordable Refinance Plan. In the initial plan that came out in March, those with a 105% loan-to-value could refinance; not necessarily at the extremely low mortgage rates, but they could refinance. Now that the housing market does not seem to be getting much better, the refinance plan has been extended to 125% loan-to-value. You could be have 25% negative equity in your home and still have the opportunity to refinance. This has never been the case in the history of the United States housing market.
Now that we know that the refinance plan has been extended is it now time for you to go for that refinance. I have many friends and family members who did not want to refinance because they knew their appraisal value would come to way too low for them to even be considered. Now that the Obama Refinance plan has been changed to 125% LTV, I would imagine many of them are going to seek out refinancing at these historically low mortgage rates. Will you take advantage of this unprecedented time as well?
President Obama continues to offer amazing opportunities for those who want to refinance. He recently extended the Making Home Affordable Refinance Plan to 125% loan-to-value. This is almost unheard of as you can have a large amount of negative equity in your home and still have the opportunity to refinance. The problem I see with this is that mortgage lenders are going to be very discretionary with who they offer low rates to. I would be willing to bet that if you have 125% loan-to-value on your current mortgage, your refinance rate will be NOTHING close to those low advertised rates of 5% and under.
I think that President Obama is working diligently and hopes to help all Americans to save money, but some home owners should not be allowed to refinance. I realize that many people have seen the value of their homes decline greatly because of others mistakes, but there are people who are very bad with their money and as soon as they refinance, they are going to waste all the money saved by refinancing. Ultimately, the mortgage lenders realize this as well by just taking a look at the credit score of the individual applying for a refinance.
If you have made intelligent financial decisions, President Obama is willing to help you out in many ways, including refinancing. The troubling issue is that many of the people who have made very bad financial decisions will now get to refinance and they are going to waste away more money like they have in the past.
There is a very interesting article on Reuters about low mortgage rates helping the housing market located here. It is an interesting perspective in that the article explains that easy money is making home prices look like they are improving. It may very well be the fact that they are not. The artificially low mortgage rates are causing home prices to go up because as mortgage rates decrease, home prices increase. If the government continues to push mortgage rates down to the 5% level, it is all in due time before home prices start rising because mortgage rates are so low.
Do you feel that the housing market has gotten any better? I have many friends who live in states where there seems to be no improvment. The states of Ohio and Indiana continue to see declines in home prices. I have friends and family in each state who have been trying to unload a house since late 2006 and they have yet to get anything close to what they want. Several offers have come in over 20% lower than their asking price. So, are the low mortgage rates making the home price data look better than it actually is?
