How far can the Fed make the mortgage rates to fall as the 30 year fixed mortgage rates fell below 5 percent? Some say the mortgage rates may go as low as 3.5 percent. The question is as the mortgage rates are so low should you or should you not refinance your home mortgage.
Indeed the fact that the 30 year fixed mortgage rates are falling below 5 percent is a good news for those people who want to refinance or modify their mortgage loan. According to Bloomberg 30 year fixed loans fall to 4.98 percent, but Reuters is skeptical about the cost that we may be paying down the road.
Yesterday the Federal reserve announced that in order to to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. Not everyone agrees that this is a good plan to help to improve the economy. Analysts are afraid of inflation, but the Fed says so far it's under control.
How low can the 30 year fixed and 15 year fixed rate mortgage rates go. Can we see one day mortgage rates as low as 4 percent? Quite possible.
First of all, what are the ways of making homes affordable?
In order for people want to refinance their mortgage or apply for mortgage loan modification they need to see lower rates that they are sure they can handle the entire process. Keep in mind that either refinancing or loan modification both cost money. Many home owners are careful and are holding back from going through this process because they are either unsure of tomorrow's day or unsure of the value of their house. They simple don't think it's a good idea to refinance if their house is not worth what it's being paid for.
Therefore, the Federal Reserve in my opinion is doing the right thing by adopting policies that push the 30 year fixed mortgage rates down. Eventually this will lower people's bottom line, which is the monthly payment, free some substantial amount of cash, which will help to reignite the real estate, lending and financial industries. It will increase the consumer spending.
The Fed is making clear it wants to push the long term and short term mortgage rates down to help the struggling homeowners.
Is this time to refinance?
Perhaps for some it is. Seekingalpha.com writes that "Given the Fed’s open ended determination to lower mortgage rates, it is very likely that we may see the 30 year fixed rate mortgage at 3.5% or lower. The Fed’s plan to purchase a massive amount of mortgage backed securities is certain to cause a large drop in mortgage rates."
The best thing is to consult your mortgage consultant for seeking advice. This story does not intend to give any advice. Another good thing is to determine if you are eligible for government's Home Affordable Refinance or Modification or Makinghomesaffordable.gov, which gives you further information on government's plan to help the homeowners.
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