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Mortgage interest rates question
Old 01-23-2008, 11:15 AM   #1
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Mortgage interest rates question

I see interest rates as low as 5.45% and a couple things on the market that look kind of nice in my price range, in neighborhoods I like. So I am starting to consider dialing the numbers on the signs in the lawns...

I just have a quick question, I heard yesterday that a lot of people expect interest rates to come down even lower when the fed has their regularly scheduled meeting at the end of the month. I know there are different "rates" that are lowered, is anything that could lower consumer mortgage rates likely to come down again anytime soon?

I realize the answer is just speculation...

Thanks
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Old 01-23-2008, 11:43 AM   #2
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Good question. Fixed mortgage rates are set by the market, rather than the Fed, so any expectations about rates re a guess at which way the market for mortgage bonds will go. I think that mortgage bond rates have not dropped as much as treasury rates, so it is possible that you could see mortgage rates notably lower than where they are now (or not). ARM rates would be more affected by Fed actions, and it is hard to see how there won't be more cuts in the future.

If you are planning on a fixed rate mortgage, you can always refinance if rates drop.
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Old 01-23-2008, 03:08 PM   #3
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Thanks. I knew mortgage interest rates weren't directly tied into the fed rates, but didn't know if there was some predictable fallout from what was going on.
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Old 01-23-2008, 05:02 PM   #4
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I don't personally expect long-term rates to fall that much, and that's what drives mortgage rates. As this panic unfolds, people want cash, such as money markets and T-bills. That "flight to safety" is hugely pushing down short-term rates (as is the Fed, which more directly influences short-term rates, not long-term) but long-term rates are usually tied to expectations about economic growth and inflation.
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Old 01-23-2008, 05:08 PM   #5
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The yield on the 10-year treasury got as low as 3.3% today. It hasn't been that low since 2003. And before that, it hadn't been that low since the 1960's.

By the end of day, the yield moved up to about 3.61%. So, if you were to get a 15 year mortgage at 4.625% (which I did today), that would imply a 100bp spread, which I think is very good in this environment.
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Old 01-23-2008, 10:43 PM   #6
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I would suggest shopping for a good realtor rather than dialing the numbers on the lawn signs.....get someone that can give you a heads up when the right property at the right price is available. Part of the reason I say this is that I have been watching the neighborhood for investment property and I just found something that has potential, but.........too late someone has already made an offer on it.
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Old 02-05-2008, 02:01 PM   #7
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Thanks for the info. Update: just made an offer during lunch today. Keeping my cell phone handy like my life depended on it...
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Old 02-05-2008, 08:29 PM   #8
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I agree with Jazz's comment about getting a good realtor on your side.(Or in my case, for our first house, we'd looked at so many houses, she must have thought her time investment had to pay off) Anyway, we got a call from her about a new listing, looked at it, made an offer, and were accepted in about an hour from the time the owner signed the listing!
(This was in 1970 - assumed a 2.1% contract for deed)
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Old 02-07-2008, 10:50 AM   #9
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Quote:
Originally Posted by tpcooper View Post
I see interest rates as low as 5.45% and a couple things on the market that look kind of nice in my price range, in neighborhoods I like. So I am starting to consider dialing the numbers on the signs in the lawns...

I just have a quick question, I heard yesterday that a lot of people expect interest rates to come down even lower when the fed has their regularly scheduled meeting at the end of the month. I know there are different "rates" that are lowered, is anything that could lower consumer mortgage rates likely to come down again anytime soon?

I realize the answer is just speculation...

Thanks
Something I wish my wife and I could have done (but we weren't financially able to). First mortgage would have been a 15 year mortgage. Especially at the rates out there now. We just did a refi on a 15 year @ 4.625%, and loving the fact that from day 1, more money will go towards principle than interest. Woooo hoooo!
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Old 02-07-2008, 03:20 PM   #10
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I have been watching 30 year fixed rates, and am hard pressed to find anything which can beat my current 5.75% 30 year fixed.

I am looking for a 30 year fixed at less than 5%. If you find something that low, post it here, PLEASE!
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Old 02-08-2008, 10:30 AM   #11
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I heard yesterday that a lot of people expect interest rates to come down even lower when the fed has their regularly scheduled meeting at the end of the month.
I don't expect to know how rates will react. Mortgage rates aren't really any easier to predict than bond rates. As mentioned earlier, you can follow the 10-year treasury rate to get an idea where mortgage rates are going.

Nobody can say for sure - so best advice is to run the numbers and lock in a good rate while it lasts. In the long run, +/- one percent will still be a lot of money, but given how low our rates are now historically you can't go wrong.
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