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Mortgage Rate Predictions – March 19th – Mortgage Rates Go Under 5% as Predicted

Posted on | March 19, 2009 | 3 Comments

ben-bernanke-money-35914On Monday, I predicted that mortgage rates would go under 5% and that is exactly what happened.  Here is the commentary I gave three days ago:

Without further ado, let’s get to the mortgage rate predictions for March 19th.  Last week, the 30 year fixed rate mortgage average was 5.03%, one of the lowest levels since Freddie Mac started collecting data.  The 5.0% level has definitely been a psychological floor for mortgage rates, but I see that getting broken this week.  If it is not broken this week, I would expect to see mortgage rates under 5%.  My prediction is
30 year fixed rate mortgage – 4.97%
ACTUAL Freddie Mac 30 year fixed rate mortgage – 4.98%

I was quite close again with my prediction; being off .01% is acceptable for me.

On March 18th, Ben Bernanke and the Federal Reserve Bank decided to buy up to $350 billion in long term treasuries and $750 billion in mortgage backed securities.  While I believe this is terrible monetary policy it will definitely push mortgage rates MUCH lower.  I truly believe we will see mortgage rates steadily fall from here.

The problem remains that lenders are having great difficulty finding capital to loan for these mortgages.  The number of mortgage applications will skyrocket over the next few weeks as everyone who considered a refi in the past is sure to do it now, possibly causing a refi boom.  There will also be an influx of interest from new home buyers.  Ultimately, the interest from the new home buyers will hit a wall due to the unemployment rate.

If individuals are losing their jobs, they will strongly desire to refinance to get lower mortgage rates.  On the flip side, if you do not own a house and you lose your job, there is no way you can afford to take on a mortgage payment.  This is why I believe rates will continue to fall and will give the financially responsible a great opportunity to save a lot of money.  If rates fall to 4.25% or lower, many current home owners will save thousands each year on their mortgage payment.

So now that the Federal Reserve Bank has decided to created over $1 trillion out of thin air, what will happen?  As stated many times, Ben Bernanke, the printing press Fed Chairman, is going to cause HYPERINFLATION while devaluing our currency.  In the long run, you will see HUGE gains in the commodity arena, such as gold and silver.  We are already seeing the effects one day after the decision.

Gold is up over $60 an ounce while silver has rocketed up over 3%.  Expect to see much more of this in the future.  I have been predicting a run up in commodities for quite some time now and Ben Bernanke did everything he could to make it happen.  Expect to see the biggest investment gains in actual commodities.  I would not necessarily buy commodities stocks.  I think etfs of the actual commodities would be a better investment.  DBA, GLD, SLV, DBE and DBP are just a few commodities etfs that should see great gains in the next few years.

Overall, the injection of $1 trillion into the economy will lower mortgage interest rates.  Will that help put a bottom in the housing market?  Probably not.  These is still over 16 months supply of housing inventory that needs to be sold.  As stated earlier, the unemployment rate will hinder housing inventory from being sold to new home buyers.  The only way this number is going to decline is if current home owners refi to a much lower rate and decide to buy a second home which is quite possible.

Make sure to come back each Monday for my mortgage rate predictions and then again on Thursday to see how accurate those predictions were.  Bookmark the link below for easier access to these predictions.

Category: Mortgage Rate Predictions

Comments

3 Responses to “Mortgage Rate Predictions – March 19th – Mortgage Rates Go Under 5% as Predicted”

  1. What is Quantitative Easing? « Credit Cards, Credit Reports, and Debt Topics
    March 19th, 2009 @ 12:54 pm

    [...] One of the outcomes of this quantitative easing is that we are seeing lower interest rates. The Fed rate is effectively at 0%, and so there is nothing that the body can do in terms of lower interest rates even further. This quantitative easing is meant to help send rates lower in order to stimulate the borrowing that keeps the economy running. Especially of concern are mortgage rates. [...]

  2. Quantitative Easing and Mortgage Rates : Yielding Wealth
    March 19th, 2009 @ 1:35 pm

    [...] thousands of dollars over the life of your home mortgage loan if you refinance to these rates. Even 30-year fixed rates are below 5% right now. You can get even better rates with a 15-year fixed mortgage. Share and [...]

  3. s2kreno
    March 20th, 2009 @ 4:46 pm

    OK for Freddie Mac rates, but this is the SUBPRIME Blogger. So what’s going on with subprime loans? Availability? Conditions/ Rates? Or are the remaining choices FHA or hard money?

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