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Will the rates come back down or is this it?

Did I miss the boat? Should I refi now or wait just a bit? by anthonydimarco from Santa Clarita, California. Dec 13th 2010 Reply


Sales Manager Matthew Boyce (bestlender)
#8 ranked lender in New Jersey - 19 contributions

The honest truth is nobody really knows. They said when the QEII came out rates would go below 4%. Then when they started rising they said just wait and they'll come down when the jobs report shows an increase in unemployment. When that happened the OPPOSITE occured and now you're lucky if you can get 4.75% - 5.00%.Bottom line is if it still makes sense and you're at say 6.5% and can save a few hundred a month just go for it. If you have the luxury of waiting it out I would say lets see where the new year takes us. Historically rates spike at the end of the year due to last minute profits from investors.If you want a little more detailed of an explanation feel free to email me at mboyce@emmloans.com. Thanks!

Dec 13th 2010
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Rick Pelleriti (RickPelleriti)
#363 ranked lender in California - 59 contributions

Don't believe the experts, as they have been shown to be wrong half the time. At the beginning of 2010, everyone predicted rates would rise to 5.5% or so. However, the exact opposite happened, with wholesale rates for Conforming loans dropping to 3.75% - the lowest in history.Now, with the spectre of inflation coming back, and lower demand for our Securities from countries like China, rates have taken a recent spike - to 4.625% as of December 13, 2010.Experts are now predicting the era of low rates is over. I believe this is once again short-sighted - as no one knows what global events impacting our nations economy will be over the coming months.If it makes sense financially to refinance right now, I would do so. If rates do indeed drop back to the high 3s, then you can always revisit your situation.I can always help you calculate your exact break-even point if you need help at rick@upfrontmortgageplanner.com.

Dec 14th 2010
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Jim Costello (jimc@homemortgagelender.com)
#82 ranked lender in Florida - 22 contributions

The Federal Reserve has yet to begin its continued purchase of $600 Billion worth of Fannie Mae bonds, known as Quantitative Easing. What does that mean for you? I am glad you asked. The Fed has installed this program to bring down market interest rates. Due to the fact that Fed Funds rates are close to zero and they have no other ways to reduce interest rates, the Fed decided to do what is called "Quantitative Easing" or buying back Fannie Mae bonds. The market was recently spooked by the Feds announcement, as the market deems these purchases inherently bad for the economy, causing mortgage rates to go up. This is because the Federal Reserve is essentially printing up money to buy back its own bonds, which could be inflationary. However, with the economy stuck in a severe recession and retailers, producers not able to raise prices due to slack demand, these concerns are unfounded, at least in the near term.So, the effect of quantitative easing will be one which will lower rates due to the Fed's massive buying power. Lowering the supply of Fannie Mae bonds available for purchase, will raise the price of the bond, and thus lowering the interest rate. Yes, we will see a pullback in rates. Don't wait too long to lock in your rate when it does go down as the Fed's buyback is only temporary.

Dec 14th 2010
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