After a recent spike seen in mortgage rates, some consumers are wondering whether they've missed their
chance to refinance into an ultra-low rate.
Fear not: While the conforming 30-year fixed-rate mortgage hit a daily average of 5.81% last Thursday
06/18/09, it averaged 5.53% on Tuesday 06/23/09, and it's possible that rates could continue to fall.
Predicting interest rates is like predicting who is going to win the World Series in January,I feel
the recent spike is somewhat of an aberration, I expect rates will continue to drift down.
Why the recent run-up in rates? Over the past month or two, the economic skies have brightened
somewhat, and the threat of trillion-dollar budget deficits for the foreseeable future, the potential
for significant inflation, and few clues as to how the government might extricate itself from
intrusions into markets created a landscape that was not appealing to investors.
But now, rates are retreating partly because inflation doesn't seem as immediate a threat as investors
feared. In my opinion, nothing fundamentally has changed in the economy over recent weeks to warrant
the rate rise, yet he expects volatility through the remainder of the year as investors debate the
economy's health. Realistically, I think that the rates will drift under 5% again. It may take a month, may
take twomonths.
It's also important, however, to realize that extremely low rates likely won't be around forever. Luckily, we
have seen rates drop some this week, which should help many consumers breathe a little easier. But the
fact remains, the government's plan of purchasing mortgage-backed securities cannot go on indefinitely,
and when it ends, we will most certainly see a spike in rates. The hope is that the Fed can keep rates low l
ong enough to kick-start a housing recovery. Whether that will work remains to be seen.
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