Mortgage rates headed down - time to refi?

[brewer12345]

If you can whack more than 1% off your loan rate, it seems attractive to me, so long as you would be OK with the loan resetting to the max it can contractually go in 5 years' time.

Having said that, I would not be surprised in the slightest to see mortgage rates come down shortly. They have diverged from treasuries lately as the mortgage bond market has fallen apart, but the Fed's efforts are starting to take effect and agency mortgage bonds are starting to narrow the gap with treasuries.

[jblack]

Quote:

Originally Posted by brewer12345 If you can whack more than 1% off your loan rate, it seems attractive to me, so long as you would be OK with the loan resetting to the max it can contractually go in 5 years' time. Having said that, I would not be surprised in the slightest to see mortgage rates come down shortly. They have diverged from treasuries lately as the mortgage bond market has fallen apart, but the Fed's efforts are starting to take effect and agency mortgage bonds are starting to narrow the gap with treasuries.

Hope you're right....DW and I are still patiently waiting the 5.0% or less 15yr fixed. Over the past couple weeks watching the 10yr treasuries be as low (for longer) than the January dip has been frustrating.

[brewer12345]

Not sure if I quite have the brass cojones to do this, but a thought has crossed my mind: with the Fed whacking rates to beat the band and not about to reverse course any time soon, why not refi the mortgage onto a HELOC? Schwab offers a 70% LTV HELOC at prime minus 1%, which would be 5% right now (less if the Fed does what everyone seems to be expecting).

[JPatrick]

Quote:

Originally Posted by brewer12345 Not sure if I quite have the brass cojones to do this, but a thought has crossed my mind: with the Fed whacking rates to beat the band and not about to reverse course any time soon, why not refi the mortgage onto a HELOC? Schwab offers a 70% LTV HELOC at prime minus 1%, which would be 5% right now (less if the Fed does what everyone seems to be expecting).

Regarding the FED raising rates, (or not) course reversal will occur and very possibly much sooner than we might imagine... The Fed wants to turn around housing with as little pain on the inflation and falling dollar front as possible. Just as soon as we see the slightest sign housing is recovering the Fed will jump at the chance to raise. IMHO I would think that will happen about 12 months from now.

[lsbcal]

Saw this nice chart of what I think are mortgage rates that might appeal to some who are monitoring the situation: Bloomberg.com: Investment Tools

[Nords]

Quote:

Originally Posted by brewer12345 Not sure if I quite have the brass cojones to do this, but a thought has crossed my mind: with the Fed whacking rates to beat the band and not about to reverse course any time soon, why not refi the mortgage onto a HELOC? Schwab offers a 70% LTV HELOC at prime minus 1%, which would be 5% right now (less if the Fed does what everyone seems to be expecting).

That sounds like a great way to arb the interest rates.

What are the terms of the loan? Does it stop drawing after 10 years and require you to pay it back over the next 10?

NFCU shaved an eighth off their 30-year fixed-rate no-points 80% loan, but it's still 5.75% and .375% above our current rate. No change since the Fed meeting (yet).

I'm intrigued by this offer in NFCU's fixed-rate loan section: "Interest only payment options are available on 30 year products." But that's probably in its own class of interest rates.

[brewer12345]

HELOC's mostly come in the 10 year draw, 15 year repayment flavor. But Pen Fed's is a 15 year draw, bullet maturity.

[JohnDoe]

That's strange...looks like Pen Fed changed their rates twice today.

Around 11am 15yr was

5.125 0
5.000 .25
4.875 .875

Now they have

5.250 0
5.125 .375
5.000 1.125

[SecondCor521]

Quote:

Originally Posted by JohnDoe That's strange...looks like Pen Fed changed their rates twice today. Around 11am 15yr was 5.125 0 5.000 .25 4.875 .875 Now they have 5.250 0 5.125 .375 5.000 1.125

I think PenFed changes their rates once a day around lunch time. So most likely you'll see the second set of rates until tomorrow lunch time.

2Cor521

[myself]

Quote:

Originally Posted by JohnDoe That's strange...looks like Pen Fed changed their rates twice today. Around 11am 15yr was 5.125 0 5.000 .25 4.875 .875 Now they have 5.250 0 5.125 .375 5.000 1.125

The other option of course would be to "buy down" the rate by paying more points.

[brewer12345]

I am patiently waiting to see if the 5/5 ARM goes to 4.5% or so. Given how low treasury rates are and the news on the chains around Fannie and Freddy being loosened, its only a matter of time before mortgage spreads decline.

[laurence]

Quote:

Originally Posted by brewer12345 I am patiently waiting to see if the 5/5 ARM goes to 4.5% or so. Given how low treasury rates are and the news on the chains around Fannie and Freddy being loosened, its only a matter of time before mortgage spreads decline.

I know this would just be guessing, but how low do you think 15 year rates might go? I'm in a 20 year @ 5.125% so I don't think it will ever be worth it to refi, but I'm keeping my eyes open.

[brewer12345]

Quote:

Originally Posted by laurencewill I know this would just be guessing, but how low do you think 15 year rates might go? I'm in a 20 year @ 5.125% so I don't think it will ever be worth it to refi, but I'm keeping my eyes open.

Sitting on the reaminder of a 15 year at 5% myself and wondering the same thing. I really don't know. Depends on whether the mortgage market ever heals. Hard to see treasuries much lower than where they are now, so I think this is mostly about spreads of mortgages over treasuries. I think spreads could drop 75BP, maybe more, but it would require the mortgage mess to come unstuck. As long as treasuries didn't sell off enough to offset the spread drop, mortgage rates could go down a good bit.

[DblDoc]

We are about to close (hopefully) with a Pen Fed 15yr @ 5% thanks to the early posts in this thread so not likely to refi again unless rates really tumble.

DD

[JohnDoe]

I'm sitting on a 30 yr @ 6.5, and I want to get under 5 on a 15yr.

I was about to call pen fed at lunch today to see what 3 points would get me, but they changed the rates.

[Darryl]

I closed with Penfed a couple weeks ago at 15yr fixed 4.625% I think the rate was only that low for a day. I did the app at night and the next morning I had an email saying thanks all you need to do now is choose when to lock your rate (which I thought I did the night before) I replied to lock now and a few hours later the rate was climbing.

[JohnDoe]

Yea, it went from 4.625 to 5.125 the next day. That's an awesome rate.

[BristolBane]

Hi folks. Just thought I would mention this again as PenFed is currently offering 30 yr fixed at 4.875 with 0 points.

I pulled the trigger and submitted my application. I'm just hoping the appraisal does not come in so low that my LTV is > 80%. We've lost some value in the last couple years. Not sure how much though.

[jblack]

Quote:

Originally Posted by BristolBane Hi folks. Just thought I would mention this again as PenFed is currently offering 30 yr fixed at 4.875 with 0 points.

Note that PenFed is still charging a 1% origination fee for all fixed mortgages....they previously didn't do this. These are still are great rates, though.

[brewer12345]

I am thinking that I will be watching Pen Fed's 5/5 rate like a hawk. If it dips to 4.25% or less I will almost certainly pull the trigger.