Current Mortgage Rates Poised to Drop Below 5% in September?
Posted on | August 30, 2009 | No Comments
Current mortgage rates are definitely poised to drop below 5% in September. For much of 2009, the 10 year treasury rate yield was in a steady up trend with the 50 day moving average moving higher. Every time mortgage interest rates tested the 5% level we saw a strong push higher by the 10 year yield which moved average mortgage rates back to the 5.5% level. At this point, Federal Reserve Bank Chairman Ben Bernanke would reiterate that interest rates were going to stay at historically low levels.
After every single speech by Bernanke or President Obama, we have seen mortgage interest rates get all the way back down to 5.05%. This is where we sit today but things are a little different than in the recent past. The 10 year treasury rate yield has breached its 50 day moving average and that moving average is now moving down! This is a sign that we are likely to see a move down or sideways for the 10 year yield. This is great news for current mortgage rates.
If there is a speech by a Fed governor or our president this week about interest rates remaining low, we could see mortgage rates drop below 5% for the first time since May. This would be huge news for the refinance market because there will be a definite increase in interest in refinancing which will greatly help the housing market and the overall economy. There is one fear that I have about mortgage rates currently at this level. The Fed has announced the are going to stop buying US Treasuries by the end of September or October.
This is extremely bad news when it comes to the yield on Treasury rates. If the Fed does stop buying Treasuries who is going to buy them? As a country , are we back on our feet enough where other major world powers are going to buy our debt? I sure hope so because if they don’t we could see a very strong move up in treasury yields which would mean much higher mortgage interest rates. Sadly, this could happen very quick if the Fed pulls their hand out of the pot quickly.
With that being said, now is one of the best times in history to refinance or get your first mortgage. Mortgage rates currently sit at 5.05% and mortgage lenders are happy to work with you because they want your business. Many companies are advertising mortgage rates under 5% already so it might be a good idea to contact some of these companies and see what type of mortgage rate you can get!
Author: Jesse Wojdylo
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