Current Mortgage Rates Won't Last: Start Your Refinance Now!
The Federal Reserve has been purchasing trillions of dollars of mortgage backed securities, the financial instruments that provide the funds for mortgage lending and the financial market that determines current mortgage rates. The Fed also has been purchasing U.S. Treasury bills and notes, the financial tools that finance our government--adding to the national debt we read and hear about every day.
As the Fed's Treasury purchasing program comes to a close, the will decrease in demand for these investments may cause rates on Treasuries to increase, and fixed mortgage rates are closely related to longer-dated Treasuries. In the first quarter of 2010, the Fed will cease its buying of mortgage backed securities, decreasing demand and potentially causing a rise in mortgage rates.
After four quarters of economic contraction, the economy grew in the 3rd quarter of 2009. The Gross Domestic Product for that quarter, June 1 through September 30, grew at 3.5 percent. This is a signal that the current recession is ending, or may have technically ended already. As the economy improves, economic and market forces will put pressure on mortgage rates to rise as investors hedge against future inflation and bet on the Fed raising rates to fight that inflation.
As John F. Wasick says in his column in Bloomberg this week, "home refinancing may never look better." If you have been considering refinancing, it is time to stop procrastinating. Calculate your mortgage data with a mortgage refinance calculator, contact a trusted mortgage advisor, and start the process. On a $200,000 mortgage refinance, every increase of 0.25 percent increases your monthly payment by $30 per month, or one dollar for every day you have the mortgage.
It appears that the bottom of the interest rate market probably occurred in early October 2009. Since then, rates have increased about 0.25 percent. While no one knows exactly when the bottom, or top, of any market will occur, the closer you can get to refinancing around the bottom, the better chance you have of getting the best mortgage rates and saving money every month on your mortgage payment.
Don't delay, the time for mortgage refinancing is today.
Dennis C. SmithDennis is co-owner and broker of record for Stratis Financial in Southern California. With over twenty years experience in the mortgage industry he has helped homeowners save millions of dollars refinancing their homes.
