With the turmoil in the world now after the events in the Middle-East and Japan, the stock market is dropping and investors are flocking to safety. This means that there is a big run on US Treasury securities. Correspondingly, the increase in purchases in these US Treasury securities result in lower interest rates being paid on the securities. The result of all of this is lower interest rates for mortgages. As of this morning, we were able to offer 30 year fixed rate loans at 0 points up to $729,000 at 4.75%. In addition, we have 15 year fixed rate loans at 4.25%. The lowest price loans right now are the 5/1 adjustable rate loans that range from 3.5%-4.25% depending on loan size, property, LTV and credit.
These rates will not last long once the turmoil is resolved. So anyone who held off on refinancing last fall and thought that they missed the boat will have a small window of opportunity in the next week or two. If you are thinking about it, but were waiting for rates to drop back down into the 4s on 30 year fixed rate loans, they have. This represents a .5% drop from just 2 weeks ago. And, do I think they will go lower (which is the question on everyone’s mind)? No, unless we have some mass chaos in the Middle East trying to fill the power vaccuum and/or a doomsday scenario in Japan (which nobody wants)!
As the economy continues to recover, I anticipate that rates will rise back into the low 5s (30 year fixed again) in the near future. By the end of the year, barring any new world disasters or double-dip in the economy, the interest rates will likely be in the mid to upper 5s by the end of the year. So, this is the time to refinance if you are looking to save some money!