Are mortgage interest rates going up or down?

Every month, the bond markets publish trends based on daily surveys of all the major borrowers and lenders. Because the economic news from Europe continued bad, April showed a continuing movement of funds into the US market. Rightly or wrongly, US Treasuries continue to be viewed as a safe harbor in these difficult economic times. This unexpected supply of funds keeps US mortgage interest rates either stable or falling which is clearly good news for anyone currently looking for a mortgage or refinancing.

The best guess of the market watchers is that rates will continue low. This is despite the fact the housing market may be showing slight signs of life and the demand for mortgages or refinancing deals increases. Indeed, the fixed mortgage interest rates for fifteen-year loans was around 3.3%. Thirty-year loans varied around 5%. These numbers assume loans of below $415,000. The so-called jumbo loans are tracked separately.

So two factors have been encouraging more applications. The first and most obvious factor is the lower than expected mortgage interest rates. But the second factor is the willingness of more lenders to accept a smaller percentage down payment in cash for new mortgages. From a policy point of view, lenders have a dilemma. Despite the low rates, home ownership has rapidly declined from the high in 2008. In a way, this reflects the high numbers of people unemployed or feeling threatened in their current jobs. Without confidence in continuing income, people are unwilling to invest in a new home. If lenders are also demanding a larger cash payment, this money has to be saved which delays the decision to buy.

Ironically, any rise in the foreclosure rate depressing resale values at a time when fewer people can afford to buy. To break this unfortunate cycle, some lenders are therefore prepared to consider mortgage applications from people with only relatively small amounts of cash to contribute. It will be interesting to see whether this tempts more people to reenter home ownership. Perhaps the deciding factor will not be the low mortgage interest rates themselves, but the ability to borrow at fixed low rates. Only then will borrowers feel confident that they will be able to plan and manage their repayments. Variable rates introduce uncertainty and that undermines confidence. Fortunately, it looks as though bond market rates will remain low for the rest of the year.

Mortgage rates go up and down. Why is this? »

Mortgage rates go up and down. Why is this?

For those of you with short memories, interest rates reached a peak in January 1981 when the prime rate was 20%. The joke then was it was cheaper to borrow from the Mafia than your local bank. The question, of course, is why mortgage rates can go up to such high numbers one year and then fall back down the next. Is this a conspiracy between governments, banks and other more shadowy agencies? Or is there a simple explanation?

Are mortgage interest rates going up or down? »

Are mortgage interest rates going up or down?

Every month, the bond markets publish trends based on daily surveys of all the major borrowers and lenders. Because the economic news from Europe continued bad, April showed a continuing movement of funds into the US market. Rightly or wrongly, US Treasuries continue to be viewed as a safe harbor in these difficult economic times. This unexpected supply of funds keeps US mortgage interest rates either stable or falling which is clearly good news for anyone currently looking for a mortgage or refinancing.

Compare mortgage refinance quotes and save money »

Compare mortgage refinance quotes and save money

There's always a slight fear element when you start thinking about so much money, but the first rule for making good decisions about mortgage refinance quotes is to stay calm. The key variables are the APR, i.e. the interest expressed as an annual rate, the term, i.e. the number of years you propose to borrow, the points, i.e. the IRS code allows you to deduct percentage points from your mortgage as an expense if you satisfy some requirements, and the fees the lender proposes to charge you.