Are you ready to refinance when interest rates drop AGAIN?
March 6, 2008 | Brian Lebars
A great article on The Mortgage Reports, a Chicago based Real Estate Company highlighted a great point. When you’re in the process of refinancing your home loan, have you been put in position by your Mortgage Consultant to take advantage of the lowest rates when they drop; again? Even if it’s only for 28 hour period; do you have any idea what I’m even talking about? Check it out here; Ready for when interest rates drop? If I could articulate it better I would, instead I slave over the Internet to bring you this great resource. Here is a clip of what you need to read:
On January 22, 2008, mortgage rates fell quickly and without warning. They touched levels not seen in 5 years and then stayed there for a period of 28 hours.
During those 28 hours, homeowners around the country received calls from their mortgage guy.
The call went something like this:
Mortgage Guy: “Mortgage rates plunged. You should consider a refinance to lower rates.”
Homeowner: “Hey, thanks for calling me! What are rates?”
Mortgage Guy: “The 30-year fixed is priced at 5.125% with no points. It hasn’t been this low in 5 years.”
Homeowner: “Awesome! Let me think about it — I’ll call you tomorrow with the go-ahead.”
When “tomorrow” came, though, the 5.125% wasn’t available anymore. 5.125% had become 5.500%. Markets had already reversed. And then some.
When those 28 hours were over, the 30-year fixed mortgage had already started a journey that would bring it from 5.125% to 6.375% in less than a month. This happened because the Fed Funds Rate had just been lowered farther and faster than at any time in history and because the economic stimulus package had just passed.
The combined impact of these economic jump-starts made markets fearful of long-term inflation and inflation is the enemy of long-term mortgage rates.
That said, there’s been a ton of recession talk lately and that is proving to be a positive for the shortend of the mortgage rate curve. The recession fears translate into lower mortgage rates on shorter-term mortgage products like ARMs.
Don’t forget to come back here and remember who gave you the valuable information to save you some GREEN on your next home loan.
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