Will mortgage rates rise or fall?

It depends.

Since the proposed bailout of Wall Street was announced over a week ago, I've been inundated by calls with people wanting to refinance because they heard mortgage rates would be falling. Every news cast reported that this move would free the mortgage markets and rates would fall. And, they did – but for a short period of time.

After the government took over Fannie Mae & Freddie Mac, mortgage rates did come down. In fact, across the country mortgage interest rates for a 30 year fixed rate mortgage fell (on average) between .25% and .50%. And, on the Monday after the Secretary of the Treasury, Henry Paulson, announced his plan to purchase about $700 Billion in mortgages, rates fell even further.

So, I guess they were right – rates are better and everyone can refinance, right?

Well, back in March 2008, I wrote the article, “Is now a good time to buy?” which gave three reasons why it was a good time to purchase a home. The third reason I gave really applies here. Nobody can predict the future, and underwriting guidlines have become much tighter, and loan-level price adjustments (LLPAs) have increased. All of these mean that when you find a rate that works for you, lock it. Only a few of the people who called me last week actually locked their rates. Many of them were hoping rates would fall even more. Many of them did not qualify for the best available rates due to the stricter underwriting guidelines and LLPAs (See ”Credit Score Affects Interest Rates Even More”) for more information).

Since then, the markets have been on a roller coaster, and interest rates have gone back up, but are still at historically low levels. So, rates did fall but, as happens all too often, many people got greedy and waited too long to get the lowest possible rates. And, others were not eligible for these rock-bottom rates due to their credit scores and loan to value.

So John, how can we keep up with the changing rates and get the best-possible deal?

Here is my advice: Give me a call ay (708) 473-7688 so we can discuss your specific situation. We can determine what's the best possible plan for you and your family. We can determine if now is the right time to refinance for you... or not. If not, we can develop a plan and set a target interest rate that would make sense at which to refinance. In the meantime, we can work to make sure you are in the best possible position to take advantage of the best available rates when they ARE available. Give me a call – there's no obligation – EVER!

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