Simple Steps to Profit from the Chaos: Mortgage Refinancing
Posted by Michael Bradley, CFA on June 7, 2010 ·
The stock market’s decline has helped push down mortgage rates.
Rates on fixed mortgages are under 5%. The 2010 European debt crisis has been bad for the euro and bad for stocks, but there is a positive consequence emerging here in the U.S. – conventional mortgage rates are back below 5% again.
On June 3, Freddie Mac’s Weekly Primary Mortgage Market Survey found average rates on 30-year home loans at 4.79%. That’s .3% lower than in the January 7 survey. Now let’s look at the 15-year FRM. In Freddie Mac’s estimate, average interest rates on those home loans decreased from 4.50% to 4.20% over the same period.
Why are rates staying so low? Well, the lack of inflation is one reason. The other is that investors are buying plenty of Treasuries. So their rate of return has decreased and mortgage rates have decreased as a side effect. Qualifying homeowners can now access plenty of money at very low interest rates.
Contributing factors may keep rates low for a while. In addition to the current tepid inflation, prominent analysts such as Moody’s Economy.com’s Mark Zandi see the euro losing more value in the near term, and the European Central Bank keeping interest rates low (which would influence our Federal Reserve).
Should you consider refinancing? Maybe. On June 2, the Mortgage Bankers Association noted that U.S. refinancing activity had hit its highest level in seven months, accounting for about three-quarters of all mortgage applications.
If you’d like to reevaluate your mortgage situation and consider refinancing, we’re always here to discuss your options and refer you to potential lenders.
