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Mortgage Rates – Where Are They Headed?

Posted on | March 4, 2009 | No Comments

We have seen mortgage rates hover between 5% and 5.25% for quite some time now.  The question is, “where are mortgage rates headed from here?”  This is a question that is very hard to answer as we are in a troubled economic time.  Every asset class has been liquidated, the housing market continues to decline and there is absolutely no consumer confidence in the United States.  With all of this knowledge, how can anyone guess where any market is headed?

The government is doing everything in their power to force mortgage rates lower.  They are offering incentives to lenders and the Fed Funds Rate is basically 0%.  Even with this being the case, it does not mean that Americans are going to seek out a mortgage.  With the unemployment rate increasing and the amount of money in most bank accounts dwindling, very few people are willing to take on a new mortgage payment.

Many are refinancing at lower rates, but the so called “refi boom” is likely not going to happen because home prices have decreased in value.  In more words or less, it is very hard to refinance, at a low rate, a home that has lost over 50% of it’s value.    This is going to cause the refinance route to be very difficult for some.

Overall, it is likely that we will see mortgage rates remain around 5% and possibly lower.  Please realize that even though rates are this low, this does not mean that YOU will get the advertised rate.  You must have a credit score of over 720 and will need to prove to have been a “reliable” borrower over the years.  Having a house that has not tanked in value is also a plus.  It never hurts to see what mortgage rate you get offered.  We would like to hear from you if you have recently applied for a refinance or new mortgage.  What rate did you get?

Category: Refinance

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