I haven’t been at my computer much today, but what happened at 1:00 pm to send the 10 year so much lower?  Anyone who knows, please inform us by commenting below.  I will also try to do some research myself and update you later tonight.  UPDATE:  Here is the explanation.

Over the long term, I see higher interest rates as explained in my shorting treasuries article, but for now, it looks like short term mortgage rates are sinking to new lows.

The July 3rd mortgage rate trends article is available at this link: Mortgage Rate Trends – Will Rates Go Higher in July? The month of July is going to be very interesting as far as mortgage rate predictions because we are seeing a turning point in the 10 year treasury rate.  Since uptrending to 4%, we have seen a heavy sell-off all the way back down to its 50 day moving average.  Either we will see a strong bounce off this support which means higher average mortgage rates or we will see a break down through support.  If the 10 year breaks down and heads back to 3%, we could see those historically low mortgage rates that we saw in March.  Only time will tell, but the month of July should bring some interesting days for daily mortgage rates.

Mortgage rate trends are a very important aspect of buying a house.  If you are able to correctly predict when mortgage rates are going to top or bottom, you could save tens of thousands of dollars over the course of a 30 year mortgage.  It is true that it is almost impossible to pick an exact top or an exact bottom but if you study the history of financial markets, you can do very well picking overall directions and when they might change.

Since October of 2008, mortgage rate trends have been in one direction and one direction alone: down!  Rates have dropped over a full percentage point and it looks like the bottom is not coming anytime soon as the Federal Reserve Bank continues to push rates lower.  Until the housing market gets better, it seems that this is going to continue to be the case.  Well, if mortgage rates are going to continue to go lower, shouldn’t we just wait several more months to get a rate closer to 4%?

In reality that sounds like a great idea, but in practice it is very hard to do.  First of all, you never know when the perfect house for YOU might be sold.  If you have found a house that suits you perfectly, is it really going to be available in several months?  It might, but if you don’t jump on the offer you might have to live in a house that does not fit your needs properly.  There is nothing worse than having to settle for a house that is not a strong desire.

If you are refinancing you would think that there is absolutely no reason to refinance now as rates are going to go lower, right?  Well, even if rates do go lower, that does not mean that you will get a better deal by refinancing.  As rates continue to decrease, the amount of fees increases.  Mortgage lenders are not stupid, well, most of them are not.  If they know that you are extremely interested in getting a rate at under 4.5% they are going to jack up the closing cost fees just to make an extra buck.  If you think you can get out of closing costs, you will have to pay a higher rate, so you choose.

Armed with this knowledge you may be asking what the best thing to do is.  Unfortunately no one can figure that out but yourself.  You need to analzye your entire living situation.  Are you married?  Are you going through a divorce?  Do you have young children who would prefer to stay at the same school?  Do you have kids moving off to college?  Are you a young single who has absolutely no expenses?  These are answers you will need to determine what is right for you.

Most importantly, do what makes you happy.  Some of us save every penny we earn, but for what?  To spend on someone who may end up not appreciating it at all?  Sometimes we just need to go with our gut feeling and do whatever we desire.  Some people say that going out and buying a new car is the worst financial decision you can make.  Well, it may very well be that, but if you have always wanted a new car and it makes you happy to drive it, what does it matter how bad of a financial decision it is?

I am by no means condoning spending every single cent in your name; that would be a huge mistake.  If you have been wise and saved your money there is no reason you should not spend it on what makes you happy.  If you see a house that you desire, go for it!  If you don’t jump on it now, it may never come along for the rest of your life.

I will forwarn you that it is likely that rates will head lower so you can pick and choose as you like.  Too many home buyers see a home that fits some of their needs and they give in.  As I said before, if you have saved your money, spend it on what makes YOU happy, not your mortgage broker.  Creating a wish list and a financial spreadsheet will help you greatly as you will be able to pick and choose what you can live with and without.

One bit of advice I would give anyone buying something that is over $10,000 in value is to walk away at any second.  The broker or salesmen will tell you everything you want to hear and then make a comment like “this house will likely not be on the market by next week.”  Yeah, right!  The house has been on the market for over eight months and because I show interest in it, it is immediately going to sell this week?  I seriously doubt that!

I would almost encourage you to make that exact statement.  Too many of us give in to the salesmen or broker as they have the upper hand.  You need to make sure you have the upper hand at all times.  If you ever feel like the broker is pushing you around, just walk away and come back another day.  Even better, call another broker and set up appointments with them.  Brokers are begging home buyers to look at houses with them.  You have the ability to pick and choose the best of the best in the current housing market.

Overall, mortgage rate trends are definitely pointing towards lower rates but that does not mean that you should wait until the very bottom to buy a home or refinance.  The best advice I can give you is to assess your current situation and be honest with yourself.  If you are completely honest with yourself and analyze things in an objective manner, you are likely to make the right decision on a home.  If you need advice, I am sure there is someone in your social network who can give you an outside prespective that may be well needed.