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Mortgage Interest Rates will go LOWER !!! Interest rates will go lower !!!

confusion about mortgage rates

Mortgage interest rates will go much lower in less than a month. Wait, interest rates will go higher in a month. No, wait, interest rates will go much higher by the end of the year, possibly to double digits.

So, are you confused? Where are you getting your information from? I have heard both from the news media and the government that they will lower rates. We heard back in November 2008 that rates would go to 4.5%. But you can go to 4.5% now, but depending on the loan amount, the LTV, and your credit scores, it could cost you anywhere from 3 to 4 points to get that rate.

mortgage interest rates

Well, thanks to the new stimulus bill, there is major talk about lowering the interest rates. And some reports are stating as low as 4.0%. Wow, that would be awesome, or would it?

Okay, let's clear the air. In my opinion, lower rates will hurt us than help us. I have my reasons, yet I am not the only one that thinks this. Please click on this link to hear some scary news. Yahoo Finance It's around the 3:59 minute mark to 5:20, that is the part about interest rates. And I wrote about some of this here... please read : I need my quick fix, please pass me that 4.5% interest rate And I think this is very important, which was talked about in the video. Inflation vs deflation. Is it criminal?

lower interest rates

So what is the argument by some that lower interest rates are good? It lowers your payment. In my opinion, how many of you would agree that it would just allow more people to buy a bigger home instead? Instead of saving that money monthly. And if that was the case, then it would just help those to refinance. But wait, anyone that had interest rates like 7.25 percent and or higher, would have refinanced even 2 months ago, when rates were in the low 6's to high 5's, if it made sense. Ah, those that couldn't before, probably can't now, because of bad credit or no equity in the home. So this helps those that bought in the last year with interest rates in the 6's. hhhhhmmmm Interesting thoughts....

What do you say? Thoughts?

And keep this in mind, don't you have a comfortable payment in your mind? If not, your loan officer should be asking you this question and not dwell on what you can afford. So, back to the payment. If so, and that payment doesn't change, but a lower interest rate? You just buy a bigger house and not save that extra money. Yes, there are some arguments on the other side of this fence, but that is for another post.

Conclusion : So let's think about all of this? Are you a true blue gambler? You want to buy a house now, you can afford it, but you decide to wait a month, because you heard that rates will come down even more. What happens if they don't come down?

You can refinance to a 5% fixed rate with 1 point and that would save you around $200 a month. And you plan to be in the house for over 5 years. But wait, you don't want to do it now because rates are coming down. The media and government said so. But what happens if they don't?

Food for thought.... We all have heard that the government are buying up MBS's, which are mortgage backed securities. But what we don't know are what coupons they are buying. Are they sinking our money into the 4.5% coupons? The 6.0% coupon? How about the 6.5% coupon. The federal government doesn't set rates for mortgages. Interest Rates can change daily due to the different market changes. My thought on that? Even if the gov't bought the MBS's, which would lower rates, how long would the rates stay low? We have already been through this a few times. Rates would stay low for a day or two and then climb back up.

My advice? Stop listening to the media, politicians, gov't, and those in the mortgage industry that will tell you to float your rate. If you can refinance now and it makes sense, do it. If you had planned on buying, that you can afford it, and that you feel positive about it,.... then do it. Don't wait for false hope, it could bite you in the arse. Talk to a mortgage professional about this, to see what your options are now. But if someone tells you to float now or wait later? You be the judge of that when or if that day comes. Do you want to take that gamble?

On a side note, here is a post written by Colleen Craig - Giving those of us that missed this information the other day..

Economic Stimulus plan helping the ones that actually paid their mortgage?

And a post by Robert Ashby, why he thinks rates will go up and soon. I fully agree with this and have stated that rates will be in the 7's and 8's by the end of the year. I think this is spot on ... Please read :

Inflation: Hidden Giant Waiting to Drive Mortgage Rates Higher?

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- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 02/20/2009 10:37 PM

Comments (60)

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60 Comments on Mortgage Interest Rates will go LOWER !!! Interest rates will go lower !!!

FEB

You know, I guess I have always been of the school that the lower interest rates would encourage people to buy and refinance thus stimulating the economy? However, without being a finance expert by any stretch of the imagination- although I play one on TV - I do know that the lower interest rates hurt the value of the dollar in competing world markets.

The low interest rates don't really compel us to keep money in savings, but then I think most folks think of their savings as their retirement accounts. I know they are not the same, but I think most folks I see do treat their 401K as a savings.

PUNT!!!!!

AUDREY.... some excellent observations in my opinion, and I agree.... hence why I wrote this. I just didn't want to make it very long, but I have made some of those savings. People want save in many cases. Sure, refinancing into a low rate will free up more money, that could go to bills. But people tend to buy new things then. People aren't aware of this, but it will even get worse down the road, if rates stay low or go lower.

TOM... hey, did you get 25 points for that? lol But thanks for the laugh...

Jeff,

I must be getting old,

I'm getting nostalgic,

I remember and long for a time

when the market controlled the interest rates.

A time when savers could collect a reasonable return!

A time when the good and honorable won.

A time when consumers were responsible for their own folly!

A time when mountebanks went to jail!

A time when hard work was valued more that taking off your close on film.

A time when even corrupt politicians had a sense of propriety.

I long for the simplicity of a Tea Pot Dome!

A time when good triumphed over evil!

Bill

My opinion Jeff? It is tantamount to trying to legislate morality. We will never be able to keep people from doing stupid things. There will always be a segment of the population that is going to live beyond their means. And, for a small segment, many of them will buy within their range and they might lose their job or take a pay cut and for those folks, lower rates may actually help. Rates are nothing more than fodder for social discussion at a cocktail party anyway, IMHO. It should be based on affordability not how low the rate is. A good mortgage professional will always do the right thing for their client by leading them in the right direction of good financial stewardship. Unless there is that small segment of that population that is only in it for the commission. We should always put the needs of the client first and get compensated in direct proportion to that philosophical objective....just do the right thing 1st.

Thanks for the discussion

I guess I am still too ne wto think that the lower rates will stimulate the economy. I heard the other day that Amerocans are saving at a rate of 4% as oposed to the .5% that they normally save. I am confused, are we supposed to save or aren't we?

I think one of the reasons we are saving is beacuse we know that there will be no Social Security benefits for us when we come to retirement age.

I am so confused - and it's not just the blonde hair!

Speaking of interest rates - my credit card companies stink - I was late on one payment on one card - they didn't raise their rate, but 2 others did.

Sorry, Jeff, that was a little off-subject rant. :)

You raise some great points, but I am still a believer that 4% interest rates would be a benefit to the marketplace. We need to get investors into this market to buy up the problem properties. Lower interest rates will make these properites more attractive and help them sell.

William and Bridget's comments above certainly sum it all up for me..

Specifically allowing the Free Market be a free market like it should have been... this mess was created from tinkering with the market to begin with so "Everybody Can Own a Home"... Ahhhh...

Your advice is spot on... somebody needs to get this message out to the bumbling politicians confusing the markets who have little clue of how we even got here in the first place. (Or so they claim.)

I have always believed that no matter what....the buyer has to look at his situation and circumstances. If they are serious about buying their home or need to refinance and gambling on wishing, hoping and hear say...then they will be the losers. There is NO crystal ball here that is guaranteeing them a lower interest rate...or that prices will fall further while interest rates go up (boy...is that getting a deal or what???? ) Bottom line, do what their situation tells them to and they'll be fine....Call you up...you'll tell them the straight scoop!:)

I would love to see interest rates start to rise and get these buyers off the fence...... It is unbelievable how many SHOPPERS are out there....but no commitment. It is time for a scare that the low interest rate party is over.........

Great points. The real value in the market now is low prices, regardless of what the interest rate is.

Jason Sanders

The Value Pages Group

If mortgage rates will lower, then why can't the bank modify people who are in need and prevent foreclosure?

WILLIAM..... . you can certainly be funny at times. You make some excellent points in your comment. The good old times... I just hope that we can look back 15 years from now and actually say the same thing.

BO..... . I just spoke to a realtor about that same thing today, that we will never be able to stop people from doing stupid things. But I certainly feel like we can educate them about it. In this case, write an opinion that might possiblly stimulate their mind to think some more. And yes, a good mortgage professional will steer someone into a good direction, and not just for profit. thanks

BRIDGET..... . I would disagree, old or new in this business, it's always good to have an opinion... and in your case, a fresh mind that won't be tanted by some of the old ways of thinking, that might be negative,

In regards to saving... I don't know as many people that are saving. Sure, people save and save for buying homes. But I think this is hard for the average consumer. I just don't personally think lower rates will stimulate the economy. Hell, rates have been in the 5's for a while now, and the market isn't booming. When will it, when mortgages will be interest only at 1%? lol Something to ponder about.

VIRGINIA.... . off the subject? nah, you just hijacked my blog... ;o)

Bringing back the fun in commenting and blogging.....

SIMON.... . I will disagree about your first sentence, but I will agree with your 2nd sentence. I believe 110% that we need to get investors back into this market place, but experienced ones. Not those that didn't know what they were doing and got greedy because of a great market 3 to 5 years ago. Read this post by Beth Forbes... I thought it was excellent..

I am a genius! I have solved the housing crisis!

But getting back to your first sentence. Even with lower rates, there are still major penalties on investment loans. Major... which would still raise those rates. It's because of risk and a few other things. Even if you could get the rate to 4%, for an investor, they would have to put 20% down and even then, that rete would be about 1% higher with with 2 to 3 points.

Hi Jeff ~ Your title will pull them in! It's really amazing what your hear people saying about rates. I have a very hard time understanding delaying a home purchase due to the hope /gamble that rates may go down a bit. They're so low now it seems nuts to me to run the risk. I did the watch the video in its entirety but truthfully didn't study enough (almost any) economics to make heads or tails of it. In fact I keep hearing about deflation rather than hyper-inflation so beats me to pieces.

Liz

PAUL..... . you make a very good point and I agree with you. Wall Street and many lenders got greedy, allowing many people buy a home, that maybe shouldn't have. Yes, there can be an argument on the flip side. It also allowed many people that couldn't buy a home before because they had little or no money, yet they are still making good on their mortgages. How about the loss of jobs? That could be a big part of the reason for this mess. Just food for thought.

But overall, yes, we need to get these messages out to the politicians.... it just seems to be getting worse, not better... and what happened to common sense & politics being in the same sentence.???

SALLY.... . no, there is no crystal ball out there. We can just guess, assume, make educated guesses,... but those making statements of such promises that they have no control over? rut row... and thanks for that last polite sentence as a compliment.

TIM M. ..... . I think many of those fence sitters are just that, sitting on the fence until breaks. Or, just getting poor advice. 5.00% rates are awesome... but the media and the gov't isn't helping with this. Again, just putting false hope out there. And that interest party? Myself and a few others feel that it might be here quicker than we think. Are we prepared for it? I don't think so.. thanks

JASON..... . there is an excellent value in the housing market now. That's what we need to get out there, not lower interest rates. thanks

CHRISTINE.... . that's a good question. But many will answer... it's called risk. The banks don't want to lose out on their original profit. Banks aren't in it to lose money... yet, when the house goes into foreclosure, they will typically lose money then. Maybe they look for the happy medium? Hope & pray? There are a lot of opinions on that one and my comment would become a blog... lol THanks for the question and I hope other members read it and chime in. thanks

FEB

Thanks for the post. I'm a fence sitter myself. Don't need to refinance, but if the rates get THAT low, I will. (And I won't wait around for them to get even lower!)

Jeff,

I agree.... stop listening to the media. This was some great food for thought. Thanks for sharing. I hadn't really thought about the negative impact of lower rates.

Jeff, I think you hit the nail on the head! People's bills always rise to meet their income. There are very few people that have the "perfect" housing ratio of 28/31 and I am still getting approvals that allow for more than 55% DTI. Part of this is their Realtor/mortgage broker not impressing on them the importance of the lower house payment but ultimately, the borrower is responsible. Many people will just buy more house if their payment is lower. Personally, I would love to see the rates go down! I missed the 4.75% on a 15 year in January so I jumped at refinancing the first week of December so I didn't lose the lower rate again. 5% on a 20 year isn't bad but I am still watching the 15 year rates and hoping they will go lower! Of course, I am only refinancing to get the lower rate and with that, I can afford to shorten the term unlike a lot of people that would spend the money they would save on their payment.

Sorry for the book! I am stepping off my soap box now!

ELIZABETH B. ..... .that was the whole purpose of this title. To me, it's common sense to use a title such as this, but at other times, use my key rich search words even if they are boring.

In regards to your comment? In my honest opinion, they aren't really true homebuyers, if waiting for lower rates. Either they are greedy or it's just a pipe dream. That they are just fooling themselves.

In regards to inflation and such, did you read that blog of mine? There is a link to it in my blog above. And then go look up hyper-inflation. Maybe all of that would help some. thanks

BENJAMIN..... . my pleasure. Curious though.... what rate do you need, to make it a difference. There many people that don't need to refinance, because they can make the payments. But with many of those same people, you can actually still save some good money. But it all comes down to your goals and if you plan on being in the house for a while, it would usually make sense. Just food for thought.

CINDY..... . thanks for the kind compliments. And to be honest, there are even many loan officers that don't know or understand the negative impact that low rates will have. These same people will push low rates and imbed this in the consumers mind. Just as the media does. And many of these same loan officers in my opinion will argue payment, that you don't need to talk about comfortable payment to the borrower. Ouch, that comment alone is very scary and those loan officers scare me big time.

LIBBY..... . hence why I argue with several that say lower rates will help. People will buy, period. In my opinion, people will just buy bigger, if they have a payment in their head. It won't be about the payment savings, only for refinances in most cases. In regards to the book, no problem. Just thanks for the compliment.

Jeff - It comes down to what is the right tool for the job. If a homeowner has an ARM that is ratcheting up beyond their ability to pay then a refinance at a lower rate will certainly help. Lower rates may also help out others who are facing difficult times and if the lower rates stem the tsunami of foreclosures we all benefit.

Very interesting topic.. Hard to say which way rates will go... Will sit on the fence post and watch them go up and down.. :) Hopefully they will go down

Good post and good comments. I especially like your conclusion. If you can buy/refi now, do so. (paraphrased)I am currently deciding between buying / building. Obviously, the latter option makes me much more susceptible to rate changes. A decrease would be nice, but not affect anything I'm doing. An increase (esp a significant one) would cause all kinds of problems though. Anyone who thinks rates are bad now, needs to look at the historical data. Educated buyers will purchase. If rates drop, they can refi. If rates increase, no problem. For the greedy or uneducated sitting on the fence, guessing wrong could mean being a renter for quite some time.

GEORGE..... . I am not going to disagree with those comments that you stated. But, read the comment by Erik, right above mine here. I truly believe, that overall, low rates staying low and going low will have a great impact on us in the near future. And I am not the only that believes this. I would rather suffer some now, then suffer more down the road and for a longer period. Just as I stated that we will hit a recession in several years, and it happening??? I actually said that we were in a slight recession over 2 years ago... Maybe even 3 years ago. And look, we are in one now. Just as many predict rates, any prediction can be like throwing darts. You won't always hit the bulls eye. thanks for your comment.

ROLAND.... . yes, it could be hard to say. But from recent activity, when the gov't did buy billions of dollars of MBS's, rates went down, and not to much longer, went back up. I fear the same, would could cost us a lot more money now and later. I think in this case, we need to let the market correct itself. Just my humble .02. thanks for yours...

ERIK.... . if I would have said that conclusion in the beginning, it might have stopped many people from reading further... lol But thank you very much for that kind compliment and for the other compliments.

Overall, I agree with your one comment 110%. "Anyone who thinks rates are bad now, needs to look at the historical data."

I don't think it can get any truer than that. And I think it does come down to the greedy or the uneducated, hence why I love and strive to write blogs such as this one. I really think that we need to put this in every ones minds, so they have more ammunition to make those educated decisions. thanks again..

Hi Jeff - Good advice. I'm on a media fast. Tired of all the negative "Crisis" palaver.

See ya on the next webinar on Monday,

Marlene

nice post Jeff - my thoughts are if you are below 6% it is a win compared to what people dealt with in years past - as a society, we are way to greedy

Jeff, I have always told my buyers, we don't have crystal balls, no one knows, if they need a home go for it. We don't control the market anymore than we control interest rates. Besides they are ridiculously low now.

Hello Jeff !

Another well written post on the subject, and I feel a more positive vibe in this one !!

But as we spoke about, there's usually a consequence, we'll just have to see how it plays out.

Either way, rates are STILL very attractive now, and I am thoroughly encouraging buyers to take advantage...

Cheers !

Sheldon

Stop listening to the media, politicians, gov't, and those in the mortgage industry that will tell you to float your rate. If you can refinance now and it makes sense, do it.

Very sage advise, people need to listen to common sense, not what IF's or could be's, act on today if its what you have been intending to do.. then DO IT. Quit wasting your life in limbo for the What IFs.

Hi Jeff, I have thought more than once in the recent past that lower interest rates will encourage buyers to once again buy more than they can afford. As someone above commented, there will always be people who buy beyond their means. The scary difference now is that they may be thinking "So what. If I can't pay, I'll declare bankruptcy and have a judge dismiss my mortgage altogether." What then? In all the years I have been selling I have cautioned people not to buy beyond what they can afford. I tell them if they want to never go on a vacation, or out to dinner and a movie, then go ahead and spend the max. But if they think they might enjoy those things then spend less. No buyer has ever told me that it was bad advice.

Jeff great post ....easy to understand and something I can explain to buyers thank you......peace zane

Jeff,
Consumers are confused and who can blame them? So am I!

I have always considered my real estate business like a counciling business. When I have a buyer who describes what they want and how much they want to spend and I know they can get what they want for less, I certainly council them ( especially 1st time home buyers) on why they want to spend more than they need to and have similar amentiies. Many of my buyers have been in their home over several years and most do not have any foreclosure issues. Its sad to see what some people did when the market was "so hot".

Jeff-You do bring up some very good points. I am the type of broker that sits my clients down before I give them an approval and ask how much is comfortable for them to pay monthly then I make my approval match that price. I work mostly with first time buyers so this is an important base to cover. In some cases I even tell ask them to make a budget so they know for sure. I think that there are many brokers out there that would love to increase their paychecks by giving buyers more than they can truly afford and I think with very low interest rates those loan sharks will may come out. Isn't that one of the reasons that we are in this mess to begin with? The interest rates are pretty low now so I agree, get of the fence and buy if you are ready and stop listening to the media.

Jeff: I have alot of people I know who would refinance if rates got to 4.5% of below. They currently have mortgages at 5.5% or better. They're just fence-sitting for now as they're experienced borrowers. Regarding the purchase market picking up, I don't see a big upward blip if rates get lower. Perhaps a little one but only time will get the homebuyer motivated again. Thanks again for the post!

I'm hoping they go down. We're planning to refinance our house. We're just waiting for the drop. Of course, we do have a good rate already, and our mortgage is low since we've owned this house for 10 years, and we financed very little, but of course we'd like to have a lower interest rate. Who wouldn't?

MARLENE..... . sure, I am tired of the negative crap in regards to the Stimulus Bill. But define negative? Meaning, someone could view this post as negative. I think the truth in many cases is negative. But overall, I agree, it's bad out there intv land... lol And thanks for the compliment.

RANDALL..... . I think that is part of the problem. People are trying to justify what is good and what isn't. Rates in the 6's were even good. I have only been doing this for 16 years, but in the mid 90's, we had rates in the 8's and low 9's. People still bought then. It comes down to payment, what they can afford. Not what they want. Look what happened with theMcMansions coupled with the stated loans. Trouble, but people wanted to live large. thanks

MISSY..... . I just love it when I hear another loan officer tell a client not to lock, rates will go lower. You are right, we don't have crystal balls and even those that use to be able to predict rates, are failing at that now. Things have changed... and yes, rates are very low now. But we are a society if greed, we want them lower. And thanks to thegov't and the media, people now think about this. thanks

SHELDON..... . so, a different vibe. I guess that's good ... ;o) Hey, not all of us will always agree with each other, that's what makes the world go around. But yes, rates are low and people need to take advantage of this if they are serious. thanks

GAIL.... . I think the lack of common sense is what got us into half of this mess. I truly believe that and it just seems to get worse. I guess many of these politicians are set for life, not caring if the world comes crashing down around them? But yes, quit wasting your time in limbo.

BARB.... .you make an excellent point about those that say, hey, if I don't pay, I'll walk away from this mess. So where is the risk on their end? Especially when thegov't keeps coming out with relief programs now. How do we determine who really needs the help, just because they missed payments. Was it on purpose? Lost income? So we now spend more money on "money police", to review all of this, to make sure? I guess that would mean that there is no end to spending money. lol

ZANE.... . my pleasure and thanks for the compliments. I am glad it is easy to understand, because it is a confusing world that we live in... and the financial mess is not easy to understand. thanks

I know a lot of people that would love to be able to refinance their homes for a 4% rate and make their monthly payments considerably lower. I realize that some people will still buy way outside their means, but at that low of a rate I think you will see a lot more first time home buyers purchasing homes and fullfilling the great American dream of homeownership. Afterall, the advantages of owning a home far outway renting and maybe this lower rate will make it much more possible for a lot of renters out there. Maybe I am being naive, but I think it is an overall good thing.

CYNTHIA.... . what are you confused about? But yes, I know many consumers are confused. But I blame 50% of that on misinformation alone. I just spoke with a client yesterday that they heard from another lender about FHA mortgage insurance, that you can't get a new appraisal down the road, to try and get your MI off. That is so not true, but hence he was confused, with so many people giving him different answers. thanks

MARTY.... . I try very hard, explaining to the borrower, that they don't want to use all of their money. Use what you need and save the rest. $10,000 more down doesn't reduce their payment as much as one would think. And I am with you 110%, that we need to ask about a comfortable payment. There are a few loan officers on here that wrote about me and said differently, that I am a car salesman, if I ask that question upfront. That is very sad and scary.

KRISTINA.... . just as I agreed with Marty, right above you, I agree with also. Please read my comment to Marty, because of how a few loan officers on here attacked me, because I was asking what the borrower would be comfortable with, in the first 3 minutes of questioning. But I will disagree that we could mkae so much more, if we qualify higher. But it would depend on how much more in loan amount. If the loan amt. was raised by 50k, that would be about $750 more to me. But then again, we need to know what we are charging the consumer in the beginning. My whole point, I will say that I am sure that thus was part of the problem, but a large part of it. I just think misinformation, bait and switches at the end, and the stated loans were a big issue. thanks for the compliments.

PAUL.... . this arguement could be made for each increment of 1%. We would have people with 5% rates and if it dropped to 3.5%, people could refinance. I think some people are missing my points. Did you listen the yahoo finance video. Low rates and lower rates will hurt us even more in the near future. Why don;t we just make it 1% across the board for life. We will go bankrupct in a year then... we need to stop thinking that lower rates is the answer, just to lower one's payment. How many people get taken on a lower rate to reduce payment, when their goals aren't asked... and that they might go from 5% to 4.5%, just to say that they got 4.5%, but it might take them 7 years to recoup that money that it cost them to refinance?

Overall, I agree, I don't see a flood of homebuyers if rates dropped in the 4's. This is all a mirage in a way. Like I stated at the end, if you can buy now, and you feel good about it, you do it now,.... no fence sitting. and thanks for the compliment.

LISA.... . well, I am sure you would like that. But as I mentioned above, these lower rates, staying low and going lower, will hurt us all in the long run. That is part of our problem now... rates have been in the 6's for the most part for a long time now. What rate do you currently have now, if you don't mind me asking.

CINDY aka Southeast reality group..... . yes, I am sure there are tons more. We all would love our payments to be lower. But I think you are missing part of my points. Did you click on any of the links above? This should explain a lot more of what I am talking about, that lower rates will hurt us more than help us.

In regards to the lower rates getting even more people to buy? I disagree a lot on this. Rates are already extremely low, 5.00%... and people are jumping up and down. It's called consumer confidence, jobs, and money. I agree, owning a home far out-ways renting. But... you need money to buy. The rates in my opinion isn't the answer. Remember that more homes were being sold with the seller-funded DPA loans and rates were in the mid to high 6's? Rates are in our minds.... it comes down to how much of a payment that you are comfortable with and how much money that you have to work with. I just truly believe that more of the issue are the buyers that don't have money to buy, not the rates. Then when and if rates did go down to 4% and people don't buy still, you all will then say that if rates went to the 3's, that it would get people off the fence. When does that excuse stop? Just think about that. thanks

Yes, we need to stop listening to the media. But, this market has slowed not that people are waiting for rates to drop, but people are losing their jobs, they are afraid to spend money...or just don't have it.

Nice feature, my irish Homeboy. Get the dice out and roll em. That's the only thing that's for sure. 1 truth is that the mortgage rates, when they hit 4.75% were the lowest since 1971. That's the bottom line fact. We're only about 25-50 basis points away. It's more realistic that rates will go up than down. Needless to say, homebuyers need to act now and not wait for a lower rate. Odds are against them in the waiting game. If the rates do drop, then we can re-negotiate, but if they go up, then the homebuyer loses. Great post dude.

Pigs get fat, hogs get slaughtered.

I think that is the term that is most appropriate about mortgage rates.

5% looks pretty damn good to me.

Jeff, I won't argue your points - they are well taken. While I was an advocate of a lower fixed rate - I am afraid with all the irresponsible bailouts - doing so now would only worsen the economy.

Jeff - What a great article and congrats on the feature! I totally agree with you that buyers who are still sitting on the fence waiting for either lower rates or lower prices really are not buyers. With the low rates out there right now along with the unbelievable opportunity to buy a home at prices that we haven't seen in years, what more could a buyer ask for? When I speak to buyers today my goal is that they are comfortable with the monthly payment they are looking for versus how much they've been approved for or what the interest rate is.

Hi Jeff great blof and some grat points !

Best rates in 40+ years but real estate is suppose to GO UP!!!!! Hopefully, we will see some stability soon. Doesn't matter how cheap the money is if you are going to be upside down in a year. Best Buyer's Market ever in my opinion though...of course we haven't seen the bottem yet!

REBECCA.... . that's been part of my point in the comments and in other blogs. Lower rates aren't going to make a mad rush in buying homes, because people don't have the money to buy. You can call a lot of this hype smoke and mirrors, money wasted, to make people think that it would be better to buy. But again, the gov't forgot one main ingredient, CASH... lol Sure, there is the $8,000 tax credit, but you don't get that until after you buy your home. thanks

LARRY..... . homeboy? Irish? I am Italian... lol Okay, so you got me.. In any case, What about when rates hit 4.5% and that you can still get 4.5%, but it will cost some decent upfront monies. But we both agree, rates are more likely to go up and for serious homebuyers, they need to buy now, not just wait and hope.... that could cost them thousands. And thanks for the compliment.

MARK.... . maybe I should just have written that in my blog post... lol right? And yes, 5% looks damn attractive. But for the greedy and the ignorant, they want better or to gamble.

TIM & PAM..... . Go ahead, argue.. lol Seriously, sure, low rates can be good, but if you study the numbers and look at our current status of our economy, this would be a very short, quick fix, that would hurt us more in the near future. That is my opinion and overall, will hurt us more than help us. And you make an excellent point, with all of these bailouts, people are just thinking... hey, if it goes bad, I will get bailed out or just walk away. Very sad, yet so true. thanks

DONNA..... . it comes down to educating the borrowers. Just as you mentioned, the better loan officer will ask the borrower what payment that they are comfortable. And not be the type of loan officer that pushes the borrowers qualification without even talking about what they are comfortable with. I had a few loan officers on AR attack me because of that theory per se. One of the loan officer's defense was that if I asked a client that question in the beginning, that they should not walk, but run away. That has to be some of the worst advice that I have ever heard. And this person calls themselves a loan officer? rut row. You give people a rope, they will hang themselves... and say, hey, we can make that higher payment, knowing that they really can't, but talked themselves into it.

ERIC..... . thank you very much for those polite compliments.

JOEL..... . I am trying to follow you. Real estate is suppose to go up? Do you mean in values? And then to say, it doesn't matter how cheap the money is if you are going to be upside down in a year? Many of us know that real estate is local, but in many areas across the U.S., real estate is now stable. In several areas, the market never took a hit. And I am sure that there will be a few areas that will take a hit, but I don't see it that much anymore. And then you say, "of course we haven't seen bottom as of yet"... as in real estate prices? I think we have in most areas... not all... but I am talking about the U.S. Sure, if we take out 70% of California, most of Florida, half of Michigan, and half of Ohio, it still leaves for more than less... thanks

Remember the days when people bought homes because they got married, had children, needed more room, or wanted to move away from mom and dad? It didn't matter that the interest rates were in the double digits. The decision to buy a home should not be based on what the current interest rates are, but on the needs of the individual or family.

I agree with the "My Advice" section in your post. If someone is ready to buy...do it. Do not wait for the media or the government to give the go-ahead.

Jeff - Great post ! The bottom line is if one can refi or is interested in purchasing, they should just do it ! These programs that are being talked about... who knows what will come of them. The "stimulus package" basically put some homebuilders out of business and banks are not too far behind them at this rate. Hopefully we get some clarity next week otherwise we might see Dow 6000 ! Either way, it is an excellent time for buyers to take advantage of all the opportunity available to them. I just with the tax credit would have been available to ALL buyers. The first time homebuyers already have enough stimulus to play with !!! What about some love to investors as well ? : )

Sorry I missed you the other night in Center City Philadelphia - Friday was a rough day for me as well but am back today !! I heard it was a lot of fun. I am glad Stephanie went : ) ~ Chris

So many great comments here already. I'm a fence sitter on refinancing, I must admit. I keep thinking they will go lower as well. I know, shame on me! I certainly tell my buyers now is the time.

I am SO lucky to be selling in Huntsville. With 80% of my buyers being Engineers, they are not into the emotional purchase. It must make sense. Most of my buyers buy WELL within their means and that is a good feeling to have. Most will plunk the savings into their bank.

I agree that we all need to stop listening to the media hype. It makes me crazy, really. On one hand, if the rates are low low low, maybe our inventory will be soaked up. On the other hand, it weakens our dollar. Who knows? Certainly not me. That's why your the mortgage guy :) Just let me keep selling homes and you figure all this hard stuff out, lol. *mwa*!

I think the best case for keeping rates low has nothing to do with real estate, but rather making money cheap for the successful businesses to expand.. and keep the interest payment on the out of control national debt down to merely unreasonable rather than oh-my-God insane.

Jeff - "If you can refinance now and it makes sense, do it." Now that makes sense to me. And as Chris mentions in his comment above, they really need to show investors some love. Opening up credit to Seasoned Real Estate Investors who have made a living buying, selling, and holding property is crucial in my estimation. I don't just hope folks read this post; I hope they take it to heart. Off to read Colleen's post.

BEVERLY..... . bingo... and that's how it should be. It's not like buying a $1,000 tv that drops in price to $800, and say... "gee, we can save $200"... even if you have been thinking about it. It shouldn't be an impalse because the gov't says that we are going to lower rates to help you buy. It doesn't really work that way. Yes, it will help some and get some off the fence, but it won't be a landslide. It takes thought and preparation to buy a home, if done properly. thanks

CHRIS & STEPHANIE.... . exactly, who knows what will become of the programs that have been mentioned. And Dow 6000? rut row, I hope not... but yes, it's a great time to buy now. And about the other night, no problem. I am glad that Stephanie could make it, just sorry that I didn't get to talk to her much. Maybe we can meet up sometime soon. I am actually heading into the city now. talk later and thanks for the compliment.

ELIZABETH..... . fence sitter... tisk, tisk.... and why? What rate do you have? And in regards to the types of borrowers that you have, yes, you do seem to be lucky in that department. Overall, many of us seem to agree on this topic and what has taken place. thanks and thanks for the kind words.

LANE.... . I guess what should be mentioned then is ... what kind of rates are we talking about. I truly believe that mortgage interest rates, staying this low or going lower, will hurt us. Savings rates for other things, could be better. But it does need to be clarified on many different levels. The national debt is what scares me the most... but has it just become a number now? lol

JASON SARDI... . I make sense? cool. Did I the other night? lol I think a lot of this makes sense and the fact that we need to stop screaming about lowering the rates, unless those same people understand money and what it can do to us in the near future. thanks and I hope you enjoy Colleen's post.

Jeff,

Mortgage interest rate prediction is for those few who have found a working crystal ball. Anyone about to refinance or buy ought to do so now since rates are as attractive as can be.

FEB

ESKO.... . even those that think they have found a crystal ball, are just taking educated guesses. But if you follow the many signs, pointing to higher rates, that is a good bet that it will happen. They haven't gone up in months, because the gov't is buying them down. If they didn't interfere, rates would be much higher now, close to 7%. That's my opinion and there are others that think the same. And yes, they should do something now and not wait. thanks

FEB

Jeff,

Sorry I don't have time to read all of the comments, so I may repeat thinsg here. Oh well, people need to realize payment matters more than the rate and the payment one "qualifies" for may be more than they can afford. Rates are darn near irrelevant in the overall scheme of things, especially when you integrate the mortgage into an overall financial plan.

The bottom line is whether or not rates do actually drop (which I highly doubt), the cost of waiting versus the ptoential savings equation will be the true comparison. Do you take advantage of the low rates now? Or do you waste precious money that could be saved now in the "hopes" of lower rates in the future?

On a side note, we do know what the Fed buys on a weekly basis and even though they have shifted their purchases to lower coupon bonds, they have failed to break resistacne thus far and all they have successfully done is keep rates steady, and that may not last much longer.

PS - Thanks for the mention.

MAR

In canada the government has lowered the interest rates and people are still purchasing but not with the same urgency that it was 2 years ago when house prices almost doubled overnight, It's totally a buyers Market here in Calgary AB

MAR

Great blog- good points! If I had $1oo for every client that I have "waiting on 4.5% on 30 year fixed", I could retire! Seriously - since when does 4.875% on 30 year fixed money have the plague? THat is the way people act! Unbelievable. :)

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