Rates.....How low can they go

[1time2many]

With mortgage rates hovering around 4.3%, how much lower can they realy go...I am seriously thinking about looking into a streamline.

[jq26]

This is the million dollar question. I'm possibly looking at 2 refi's:

1) rental property: currently at 6.375% with $80/month in MI.

2) primary residence: currently at 4.875%, no MI.

Both have roughly 25% equity.

So I track rates every day. I track the 10yr bond: http://finance.yahoo.com/q/bc?s=%5ETNX&t=6m&l=on&z=l&q=l&c=

and I watch the mortgage coupon: http://www.bloomberg.com/apps/quote?ticker=MTGEFNCL:IND

Current rates are at 3.75% for 15yr refi and 4.50% for 30yr refi with no points. http://tdbank.mortgagewebcenter.com/Default.asp?bhcp=1

If I can refi the rental at 3.75% and the primary at 4.375%, it'll save me $700/month. That's not chump change.

The trend is definitely your friend right now. So after thinking a bottom might be in earlier this week thanks to a growing bond bubble, Bank of America comes out yesterday and says they think the 10yr yield will dip below 2.0% in 1Q2011. It could be accurate or it may be another wild fantasy. Who knows. But if that were true, it would put 15yr rates at approximately 3.125% and 30yr rates at 3.75%. If that happens and I can snag those rates, it'll save me $1100/month. Now we're talking...

Rates are fantastic today!! But can they go lower? Sure can. The 10yr bund yield (Germany) is 2.28% today after hitting 2.12% earlier this week. So if the US 10yr becomes comparable, you could see another 0.5% reduction of rates. And if we have a "double dip" in GDP, we could easily see 30yr rates at 3.50%.

[1time2many]

Got a quote today for a 4.25 FHA streamline.

Still on the fence about this, it will save me $105 and change per month and the cost is $750 bones.

[jq26]

Are you staying in the property longer than 7 months? If you are, every month thereafter will be $105 in your pocket. Or better yet, pay the same amount every month and trim years off of your mortgage.

I'm still holding out on the refi. I hope I'm not playing with fire here...rates jumped a bit early this week but look like their trending down still in the big picture.

[1time2many]

I'm still holding out on the refi. I hope I'm not playing with fire here...rates jumped a bit early this week but look like their trending down still in the big picture.

That is my problem, every time I think they cant go lower they do...I may get burnt in this waiting game, but I feel as soon as I do this 4% will be the standard rate.

[2ndTimeAround]

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we could easily see 30yr rates at 3.50%.

I like that way of thinking...:):) Imagine what at will do for a 15yr :):)

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[1time2many]

Well if it is to good to be true, then maybe it is.

Thought I was going to do the smart thing and get a 4.5 rate through a streamline for 750 bucks........seems that was not the real deal, the HUD-1 was completely different.....$ 750 turned into $3200 real quick:twisted:, which would knock out all the extra equity I have paid this year.

I think I will stay on the fence and continue paying the extra, I just don't see it worth doing right now for a hundred bones, the way i have it now, it will be payed off in 17 -18 years......3.75% is a target goal even if it is a 15 year deal, and the way things are going it is very plausible this will happen.

[jq26]

Yields Fall to Eisenhower Low in Pimco-BofA View of Fed Easing

September 13, 2010, 7:27 am EDT

Bond investors are growing more convinced that Federal Reserve Chairman Ben. S. Bernanke will push Treasury yields down to the levels of the 1950s with another round of asset purchases.

Goldman Sachs Group Inc. and Pacific Investment Management Co. project the Fed will resume quantitative easing by purchasing U.S. government debt as soon as this year to prevent what they see as a 25 percent chance the economy will slip back into a recession. Bank of America Corp. says the central bank will send the 10-year note yield to a record low of 1.75 percent in the first quarter of 2011.

[Amerikaner83]

I looked into a refinance with b of a and it'll only save us about 50 a month now... From 5.125 to about 4.75... Squealer and I won't jump on it until if and when they're a full point less than what we've got now.

[jq26]

10yr yields moved -30bps in the past four days. You can thank Helicopter Ben. He announced on Tuesday that they are locked and loaded to expand the Fed's balance sheet (ie create more money).

Current 10yr yield is at 2.50, only 0.08 above its 52 week low. If we break through 2.42 who knows where the bottom is. If you are thinking about refinancing or purchasing and you need to lock a mortgage rate, get ready. I'm trying to lock a 3.50% 15yr refinance. As of this morning, the rates are currently at 3.75% but by this afternoon it'll probably reset to 3.625%. One more click down and I'm going to pull the trigger.

[jq26]

Went through the 2 hour process of applying for the rental property refinance this morning. I received a conditional approval letter a few minutes ago from underwriting. No points, 3.75% 15yr mortgage. I'm happy with that. rates may go a bit lower but then again, they could go up. So I pullled the trigger.

Everything hinges on the appraisal now. I have to have 20% equity to make this happen. I hope it doesn't come in light or I burned a grand for nothing.

[1time2many]

Jq, hope it goes well for you on this, I am going to set on the fence, if rates go up then so be it, I don't for-see the job climate changing anytime soon.

I don't see a major change even if the political winds blow the other direction, there may be a small bump at the beginning then it will be the usual, without jobs things will remain stagnant........Feb will be the month to look at IMO.

[jq26]

You are probably right. The large banks agree with you. They are predicting that 1Q2011 is the absolute bottom. But in my case, the cost of me being wrong was way too high if things unexpectedly improve. Not to mention, if I wait until February it'll cost me an additional $3000 in interest paid, so rates would have to go significantly lower to more than make up for it.

15yr rates ticked down to 3.625% this morning....30yr is at 4.375%. Both at no points.

[Amerikaner83]

When we did ours we were actually locked at 5.375 but as rates went down during that period ours followed. Credit check week and half before closing gave us our current rate which was .25 lower than our lock

[jq26]

http://www.msnbc.msn.com/id/38770102/ns/business-real_estate/

[1time2many]

I am about to pull the trigger on a 15 year, but I still want to see if the Fed will go into a buying spree in Nov......I think they will and I think the hill may bring some sort of mortgage bonus back.

This could be a 1-2 punch or 1 step at a time, but the Fed will act first.

[Methuss]

Wife and I have a house under construction that is due for delivery mid to late March 2011. Seems like that will be the magic time if predictions are correct. Our current GFE for the construction is at 4.5% but since you can't get a commit letter for more than 90 days it's all going to get redone after the first of the year anyways.

And since we have the extra magic of this being a USDA rural, we get the rate, no points and no MI even with 100% financed. We can put money down, of course...and can afford to...but I'm betting the money will do us more good in a nice growth fund instead.

[Anne Tyler]

.

I like that way of thinking...:):) Imagine what at will do for a 15yr :):)

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I love your avatar, way cute!

I agree with Methus, 2 x 4's come in handy sometimes even if all you do is wave it at them.

[jq26]

We can put money down, of course...and can afford to...but I'm betting the money will do us more good in a nice growth fund instead.

Exactly. You're liquid, and locking in a long term return on this money below 4% doesn't seem wise at such low yields. What makes this strategy work so well has everything to do with the fact that you are investing the cash in appreciating assets and not on consumer garbage.

Now the fun begins with this mortgage. Appraisals, tax returns, paychecks, bank statements, etc. etc. etc.

[Pumaz]

When they go up they will go up FAST... I am amazed how long theyve been able to supress rates. The key to look for is trouble with Fannie and Freddie. As soon as banks actually have to take on risk again rates will rise.

[jq26]

Okay guys----- jobs numbers sucked today. The 10yr yield broke down into the 2.3s and mortgage rates ticked down again.

I'm seeing 30yr at 4.25% and the 15yr at 3.50% with no points.

[1time2many]

Rates are fantastic today!! But can they go lower? Sure can. The 10yr bund yield (Germany) is 2.28% today after hitting 2.12% earlier this week. So if the US 10yr becomes comparable, you could see another 0.5% reduction of rates. And if we have a "double dip" in GDP, we could easily see 30yr rates at 3.50%.

I am starting to believe this quote is going to happen.....given the fact that the Fed is locked and loaded to start a buying spree in Nov.

[Methuss]

'Nother quarter point+ drop on the 30 year fixed average. Very nice. 4.21% at close today.

[Methuss]

Down to 4.19% this week on average....

Wow. jq26 may be on the money (no pun intended) with his prediction for Q1 next year.

[jq26]

Not me...the big banks made their own predictions. I just read up daily.

I was in Vegas for the past week with a VP at a huge bank who packages and sells billions in MBS. Rumor has it that there is a monster government program in the works that will effectively refi any owner occupied regardless of LTV into a 3.5% fixed rate. Consider this a rumor at this point, but the source is solid. Don't know IF, WHEN, or CONDITIONS of this program will be announced, but keep this info in the back of your mind if you are looking to refi. I'd hate to see someone drop a few grand on refi costs unnecessarily. And if my source is right, we'll see it sooner than later.

I don't want to turn this thread into a soapbox on government intervention. Just putting out the possibility that a mortgage rate trump card is about to be thrown.