It’s never easy to recognize the end of a cycle. That said, it’s only a matter of time before mortgage rates begin inching higher. Many experts believe the existing historically low mortgage rates will remain low through the end of the year and beyond, and quite possibly edge even lower. Then again, this country has not seen mortgage rates this low since the end of World War II, prompting others to believe this is as low as they will ever go.
With the recent news of the U.S. Treasury Department again considering doling out billions of additional tax dollars in incentives to both banks and mortgage investors, is it probable we’ll see fixed-mortgage rates plunge into the low-4{421b746ef4f4588dfd87c8acf16c9c4b10a4a0127eaff1927a04f4091b6d6d60} or high-3{421b746ef4f4588dfd87c8acf16c9c4b10a4a0127eaff1927a04f4091b6d6d60} range? Or is now the time to refinance and lock in a low mortgage rate before they climb back up to the 5{421b746ef4f4588dfd87c8acf16c9c4b10a4a0127eaff1927a04f4091b6d6d60} to 6{421b746ef4f4588dfd87c8acf16c9c4b10a4a0127eaff1927a04f4091b6d6d60} range, possibly as high as the 7{421b746ef4f4588dfd87c8acf16c9c4b10a4a0127eaff1927a04f4091b6d6d60} range? Borrowers looking to refinance are facing a difficult decision to either lock now or wait. Either way, the decision to wait could be the difference in tens of thousands of dollars over the life of their mortgage.
My recommendation would be to most definitely lock now. Borrowers would be ill-advised to wait as property values continue to erode. Excellent credit and a history of timely mortgage payments would be deemed worthless if home values maintain their current downward spiral, forcing a loan-to-value above the threshold of 105{421b746ef4f4588dfd87c8acf16c9c4b10a4a0127eaff1927a04f4091b6d6d60} that has been established by the federal government’s Home Affordable Refinance Program (HARP).
