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November 20, 2008
Mortgage Rates
Is there any way to "predict" whether mortgage rates will go up or down in the next couple of months? When do you know when to lock in?
Comments
Susan--I can completely relate to your question of when to lock in. It is stressful to watch rates go up and down and not know when to jump. We got pretty lucky in that we locked in at 6.5 and then somehow our mortgage broker was able to unlock us and get us in at 6 flat, which made a big difference. are you working with a broker?
Posted by: wasder at November 20, 2008 11:00 AM
Don't even attempt it. Lock in when you're comfortable. That said, Treasury rates have come down a lot over the past two days. Not sure how sticky mortgage rates are behaving these days. Call your mortgage person and check today and tomorrow. After that its pure speculation.
If you could predict the direction of rates you could make enough money in a day to buy that $32 MM place on Sutton Place instead of living in the "outer boroughs!"
Posted by: daveinbedstuy at November 20, 2008 11:00 AM
Get a loan that has a "float down", which means that you can re-lock if rates go lower in the short term. My loan had two float downs allowed from initial to closing (I used one), both cost a tick and the second one cost an additional $350 I believe. Thus if rates go through the floor in the middle of your mortgage process you can relock to the new low rate (plus a tick).
Right now is a good time to do your initial lock, IMO. Flight to treasuries (fear) is driving the 10 year yield down, which is in turn driving the mortgage rate down. The float down can be used if things get even worse, which may or may not happen. Something to watch out for is that the fed may lower the benchmark rate, which may actually increase the mortgage rate although standard trends haven't always been holding in the current conditions.
Main point is that a quarter point or so on your mortgage rate will not make a huge difference in the long run. I wouldn't put your life on hold to wait for the perfect rate.
Posted by: justinm at November 20, 2008 11:15 AM
Freddie Mac said 30-year fixed-rate mortgage (FRM) averaged 6.04% in the past week from 6.14% a week ago and 6.20% in the same week a year ago. The 15-year FRM fell to 5.73% from 5.81% a week ago and 5.83% a year ago.
I agree that you cannot time the mortgage market, but I don't think that rates are going to skyrocket soon, given the state of the economy, so what the heck, call in daily for the next week or two and if you see a downtick, grab it. Ultimately, its a matter of what you can afford, when you need to get the money, etc. rather than whether a particular rate is "good" or not. The rate will be different the day after you lock no matter what: you've got to do it sometime.
Posted by: slopenick at November 20, 2008 11:54 AM
They seem low right now. Today the Fed cut the interest rate again on fears of deflation. I would think they'd want to increase the rates to ward off deflation. If that's the case I'd worry the rates will go up soon. Anybody know about this?
Posted by: mopar at November 20, 2008 12:30 PM
Thanks to all. I only applied yesterday. The bank we're using has a special rate program for developing communities like Bed-Stuy and it's 5.5 today which seems pretty good. I'll certainly ask about the float down too.
Posted by: Susan Elkins at November 20, 2008 1:21 PM
Cutting rates would cause short term borrowing to increase which usually leads to inflation. Thus, they're trying to ward off deflation by cutting rates. Doesn't seem to be helping though...
Posted by: justinm at November 20, 2008 1:32 PM
5.5%!!!! LOCK IT IN.
Would you tell me who they are and the contact numbers?
Thanks
Dave
Posted by: daveinbedstuy at November 20, 2008 1:41 PM
He says the new rates don't get posted til 10 am so we can wait until tomorrow morning to see what's happening and we can still get the 5.5 if we decide.
Dave how can I contact you? I don't want to post his info.
Posted by: Susan Elkins at November 20, 2008 1:51 PM
Read www.mortgagecommentary.com or sign up to have the daily commentary emailed to you. It's great.
Posted by: Cantaffordcarroll at November 20, 2008 3:05 PM
It's impossible to know. The last time the rate on the 10 year treasury was this low - in 2003 - the rate on the 30 year fixed conforming loan was 5.25% vs 6% today. Forget about the jumbos - the rate is so high it's clear that nobody wants to lend that money. So, history suggests that something has to give, that either the spread was too narrow in 2003 or it's too wide now. Longer term, all the money that's being pumped into the system will most likely drive rates up, but that's longer term. Before that however, I would not be at all surprised to see the rate on the 30 year fixed conforming under 5%. And of course I wouldn't be surprised to see it stay stuck where it is. How's that for clarity?
Posted by: raphael9 at November 20, 2008 6:09 PM
You are fucked! Fuckey fuck fucked!!!!!
The What
Someday this war is gonna end...
Posted by: Return of The What at November 20, 2008 7:27 PM
Susan,
I too am super curious about the 5.5% rate you were quoted for "developing communities like BedStuy." I am purchasing a home in Crown Heights and my mortgage expires Monday - they are still sorting out title issues. aarggh. I was locked in at 5.875% and thought that was good! The next best rate I can find is 6.2%. My email is queenie78@rocketmail.com
Cheers + thanks!
Queenie
PS. Thanks also for posting the info on how to find tax photos and for posting the Elkins House pic. stunning.
Posted by: Queenie at November 20, 2008 7:40 PM
I think what you are referring to is a CRA product. CRA for Community Renewal Act. There are different ways to qualify for this product. If you live in a low to moderate Cenus tract you can qualify for it. It was orginaly designed to spur activity in lower income areas. Some banks still offer this program but some have already phased it out.
rates are going lower and lower IMO. Flight to quality is driving down interest rates. You should be able to get 5.875% with no points on a Vanilla conforming loan and par pricing is down around 5.5%
I'm busy as hell these past few weeks. Ton of refinances are coming across my desk.
Posted by: Adam Dahill at November 20, 2008 10:29 PM
Adam, How low do you see this going? Should one have jumped on 5.875 yesterday or keep floating?
Posted by: Cantaffordcarroll at November 21, 2008 12:42 PM
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