Refinance Home Loan Rates – All Time Lows For Mortgage Rates?
Posted on | September 27, 2009 | 1 Comment
Refinance home loan rates are getting very close to all time lows. Mortgage interest rates have been below 5% for almost a full week now and it is quite possible that we are going to see rates drop below 4.9%. This would be the first time we have seen mortgage rates this low since May of 2009. The all time low for the 30 year fixed mortgage rate is right at 4.75%. It will be very interesting to see if we can get close to these levels.
The 10 year treasury rate yield hit a short term hit in early June and has been trending down for the last few months. This rolling over of the 10 year yield has helped to drop mortgage rates to new lows. For the entire first half of 2009, the 10 year yield was in a steady uptrend going from 2% all the way up to 4%. Now that the yield has rolled over and the 50 day moving average is actually heading down, it is likely that mortgage rates are free to drop much lower as well.
The 10 year yield and the 30 year fixed mortgage rate have a very strong correlation. In all reality, the only reason that mortgage rates stayed above 5% for much of the summer is the fact that the 10 year yield was in an up trend. Now that this up trend looks to have concluded, there is a great chance that we are going to see mortgage interest rates make a push towards all time lows.
The only issue at hand is the fact that the Federal Reserve Bank has been sinking money into US Treasuries in an attempt to keep yields down which would also keep interest rates down. By the end of October we know that the Fed is going to stop purchasing US Treasuries. This is likely to lead to a short term rally in treasury yields which could turn into a longer term rally. A long term rally in treasury yields means mortgage rates moving higher.
We know that this is not going to be the case until at least the end of October. It might be the case that the Fed actually extends the plan but as of now they are quite adamant about stopping the program by Halloween. If you have been thinking about refinancing or buying a new home it might be the best time ever to do so before mortgage rates start to move higher.
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Author: Jesse Wojdylo
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September 30th, 2009 @ 1:03 am
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