In case you haven't caught the news, over the last 2 weeks home loan rates have done it again, dropping to their lowest level...ever! Not only has the 30 Year Fixed rate returned to its lowest all time level, rates across the board are at their lowest levels. Yes, that means, go ahead and choose your flavor – 30 Fixed, 15 Fixed, etc – all loan types hit their lowest levels of the year! For the weekly Freddie Mac survey of all lenders, this is the first time that all have been at their lowest level.
However...The Fed is meeting December 15th and 16th, and its actions could impact home loan rates! The street will be listening very closely as Bernacke speaks about the growing concern of inflation (the arch enemy of Bonds & MBS's).
Let me explain.....You must understand, that rates are artificially low! Last November, Ben Bernanke and the Fed put into place this program to lower rates. The Federal Reserve has purchased over $1 Trillion of mortgage backed securities this year and with less than 20% of allocated funds left in the program, rates are sure to increase. Since we know the program concludes at the end of the 1st Quarter (March 2010), we know when rates will increase. The only question remaining is by how much.
The chart above shows the 30 Year Fixed Rate over the last 11 months. The first red arrow shows what took place when interest rates shot up in May, rising nearly 0.75% in a matter of days. And just as when the holidays come and go this month, the rates that are available today are likely to take off as well, only this time for good.
Interest rates that were in effect prior to the implementation of the announcement of the Fed's program last year were well above 6.00% and a return to those levels cannot be ruled out. If you are looking to refinance or currently shopping for a loan, lock your loan quickly to take advantage of the lowest rates we are not likely to see in the future. Don't Wait. Call me before the Fed acts so we can review your situation and determine if there's anything you need to do.
Remember, the reason I wanted you to see where rates have been this year is also to see how quickly they can rise. Waiting could cost you an opportunity to have an even bigger smile on your face when you say "Happy Holidays!" this month.
Not sure if refinancing makes sense for you?....If you would like to know how I can help you, call me today.With me, it's always free to discuss your individual scenario and explore your options. I welcome the opportunity to answer any questions you may have.
Thanks,
Erik
866.280.3899
