Mortgage Rates Hold Steady

[Jan 29, 2009.]

 

After sliding downward for 11 straight weeks, mortgage rates rose last week — and remained virtually unchanged through this week, according to Freddie Mac's Primary Mortgage Market Survey released Thursday. 30-year fixed-rate mortgages averaged 5.10 percent with an average 0.7 point this week, dropping just slightly below last week’s 5.12 percent average. Last year at this time, the 30-year fixed-rate mortgage average sat higher at 5.68 percent.

“Mortgage rates held steady this week,” said Frank Nothaft, Freddie Mac vice president and chief economist.  “The index of leading indicators rose 0.3 percent in December, the first increase in 6 months, fueled by an expansion in the money supply.  However, the Federal Reserve acknowledged in its January 28th policy committee statement that since December the economy has weakened further.”

Homeowners, familiar with the US Government's plan to purchase mortgage-backed securities in an effort to drive down mortgage rates, have been sitting on the sidelines waiting to pounce on rates once they hit the bottom. Unfortunately, very few will be able to adequately predict when we've hit the interest rate bottom.

Also, some economists are expressing a concern over how proposed Government spending will impact rates in the long-term. As the US Government commits to spending additional money to help stimulate the lagging economy, more money is needed. The "printing" of additional currency helps to lower the value of the dollar. As that happens, the value of mortgage bonds deteriorate forcing interest rates higher.

Homeowners are better served by contacting a loan officer now to determine if and when refinancing their mortgage makes sense. Given there are no guarantees that rates will continue to drop and understanding we may have already hit bottom, refinancing once it makes financial sense may be a more prudent strategy than simply trying to time the bottom and possibly missing out on locking in a low rate.

 

About Author:

Chris Rocks is the Regional Director of the National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges.