The 30 year fixed rate mortgage has went for a very wild ride over the last month. Rates have swung from 4.8% all the way up to 5.59% and now back down; what will the future hold?
Predicting where the 30 year fixed rate mortgage will go is something that is not very easy. Many analysts feel that the overall direction of the 10 year treasury rate will determine overall rates, but this has not been the case for much of 2009. As the 10 year has trended higher, home loan rates have actually been down or flat. That was until about a week ago when we saw a HUGE pop in rates.
It very well might be the case that after the pop, mortgage rates and the 10 year treasury rate will follow each other's trends for the remainder of 2009. If this is the case, you could easily make predictions based of one or the other. When a major trend is broken in the 10 year, the same is likely to be true for overall rates.
The one thing that the overall housing market needs at this time is some consistency in rates. With huge swings one way or the other, it is making it hard for home owners to decide what they want to do. Many home owners that were considering a refinance have no opted out because the closing costs could end up being more than the savings for the remainder of the loan. Average mortgage rates being inconsistent will only make the mortgage lending and borrowing process that much harder.
Many individuals think the process is hard enough as it is and this is just steering them away even more. If we want to see a bottom in housing prices and an improved economy, the 30 year fixed rate mortgage needs to stabilize.
