Daily Mortgage Rates – Home Loan Rates Dropping Below 5%?
Posted on | September 8, 2009 | No Comments
Daily mortgage rates have been bouncing between 4.95% and 5.15% for the entire first week of September. It looks as home loan rates are poised to drop below 5% and stay there for quite some time. For the whole summer, mortgage interest rates have been between 5% and 5.5% and have tested each of these levels several times. It seems that every single time support or resisitance is hit there is a strong bounce in the opposite direction.
Now that daily mortgage rates are around 5.05% it will be very interesting to see what happens. What makes this time different from every other time this summer is the fact that the 10 year treasury rate yield is actually down trending. Throughout the entire summer the 10 year yield was attempting to regain is up trend that began in January. Now the 10 year yield is under its 50 day moving average and the moving average is actually heading down.
With the 50-dma serving as a key resistance level this should help average mortgage rates to fall below the 5% level with some strength. We might see a short term rally in the 10 year yield but that is going to be short lived because of the resistance the yield will hit. If we hear some commentary from Ben Bernanke or President Obama on the plan to keep interest rates low we could head well below 5% soon.
The only worry that most people have is that the Federal Reserve Bank is scheduled to stop buying US Treasuries at the end of October. If the Fed stops making these purchases we are going to see a rally in the treasury yields which will pull mortgage rates up with it. All the hard work that the Fed has done to keep interest rates low might go out the window if we see a lack of interest from foreign investors in treasuries.
With this is mind, now is as good of a time as ever to start the refinance process. By the end of October we could see the bottom in mortgage interest rates and you do not want to be on the uptrend of rates. Getting your application ready now will put you well ahead of the crowd and you will be able to save yourself a lot of headaches by having your application reviewed before the swarm comes.
Author: Mike Garner
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