Refinance Mortgage Rates – September Drop, October Jump?
Posted on | September 5, 2009 | 1 Comment
Refinance mortgage rates remain extremely close to 5% in early September. For the entire first week of September we have seen refinance mortgage rates test this psychological floor. For several hours on specific days we saw mortgage interest rates break through 5% but there has been no conviction. It looks as if we are going to continue to see mortgage rates drop throughout September but October might be a different story.
The Federal Reserve Bank has stated that they are going to stop buying US Treasuries by the end of October. The plan was initially to stop purchasing treasuries by the end of September but Ben Bernanke and the Fed presidents decided they would extend the program through October. When the Fed does stop buying treasuries we can only hope that foreign investors jump in and soak of some of these investment vehicles.
If foreign investors are not interested in treasuries at current levels we are going to see the yields start to increase. As yields increase mortgage rates start to go up. With the amount of money the Fed has been sinking into treasuries we could see a HUGE move up in yields if foreign investors are not interested. This is very bad news for average mortgage rates because they are sure to shoot up with treasury yields.
Most analysts feel that Ben Bernanke and President Obama have worked too hard to let this slip through their fingers. Interest rates are at historic lows and average mortgage rates have been under 5.6% for the entire year of 2009. One slip up and we could see mortgage rates shoot all the way up to 6% or higher. The Fed always has the option to extend the program and thats what I think will happen. Until we start to see the economy get even better the Fed will continue to keep mortgage rates low.
With this in mind, now is the time to go through the home refinance process. With mortgage rates extremely close to 5% now is the time to lock in and get the deal of a lifetime. If you decide to wait and time the bottom of rates you might find that you miss the boat and end up forgoing a chance to refinance near or under 5%. There are many lenders who are currently advertising mortgage rates under 5% so it wouldn’t hurt to contact them now and take the necessary steps to get your home refinanced.
Author: Jesse Wojdylo
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September 7th, 2009 @ 11:15 pm
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