Inasmuch as I diddled around and did not pull the trigger on a re-fi when the rates were in the 4.75% range a few weeks ago, I’m now hoping that I’ll see some indication in the next weeks or months that will tell me that I might consider it again. But I don’t know what to look for. What are some things that typically precede a drop in mortgage interest rates? (aside from an international financial meltdown which preceded this last one, that is).
Mortgage rates follow the interest rates decisions by the Federal Reserve, or at least that’s the theory. The problem is that the Fed has already pushed its rates as low as they can possibly go. With the Fed rate near zero, there’s nothing that they can do to push it lower.
The truth is that the recent historic low in mortgage was created by desperate measures used by the government to try to stop the housing slump. I would not expect to see 4.75 % again.
Keep a eye on 10 year Treasury Notes. Bond prices move inverse to interest rate so if people start buying bonds out of fear that will drive rates down along with mortgage rates. You’ll have to figure out what are some reasons people might buy bonds as a flight to safety. For example if stocks start going down in price from the recent high.
I refinanced last month at 4.5% (a non-jumbo mortgage). I was thinking that rates would continue to drop, but I was tired of waiting for the bottom and pulled the trigger. Timing (aka dumb luck) is everything.
You need to have a loan broker keeping an eye on the rates and to let you know if they start falling again.
woulda shoulda coulda
I got a jumbo 30 year fixed re-fi at 4.875. The day that I singed my papers, the rate jumped up a full point. I had locked in my rate like three weeks earlier but I still feel really lucky.
You should also be aware that refinancing isn’t always as smooth as it was just a year or two ago. My refi took two months from the time I contacted my broker until we closed, and I’ve heard of refis taking up to four months. In my case, most of the delay was attributable to waiting for Chase to subordinate my HELOC. Other delays are caused by overburdened underwriters, appraisers, and closing agents. So you may not be able to jump on a good rate if you don’t have everything in place already. But lenders also won’t let your application sit forever, so you can’t just submit an application, get everything approved, and wait for the rate you want - they’ll cancel your application after some number of days if you don’t lock and close.
