Hironmoy, Home Buyer in Santa Clara, CA

Will interest rates fall below 4 % on mortgages ? say in the August - September , 2011 time frame ?

Asked by Hironmoy, Santa Clara, CA Wed Jun 1, 2011

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I would say that it is doubtful that 30 year will get below 4%. Interest rates are determined by investors and their appetite for mortgage backed securities (MBS). These securities have an inherent risk that is greater than that of CDs, government Treasuries, but less than that of corporate bonds. The risk premium that you need to pay over things like Treasuries and CDs is not likely to change that significantly and both the treasuries and CDs are very low and don't have too far to go.

So we will always see a supply and demand fluctuation, but I think it is unlikely that the demand will be so great that it pushes the yield low enough to see a 4% 30 year fixed. Remember, services have to take a cut, then companies like Fannie and Freddie who are insuring the mortgages have to take a cut before it even gets sold off to investors.
1 vote Thank Flag Link Wed Jun 1, 2011
I have a cracked crystal ball. It rolled off my desk and hit the ground when you asked this question.
I will say this. I do not know if it will get any lower. but I will say right now it will be going up by March 2012.
I have told friends for the last year, that May - August 2011 would be the optimum time to buy a home.
Keep in mind something I have noticed,... rates seem to go down when gas prices aka oil goes up.
FYI the gas and oil prices are dropping so you might be waiting 15- 50 years for rates to be this low again, if you wait much longer.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
California Department of Real Estate Broker License # 01312992
1 vote Thank Flag Link Wed Jun 1, 2011
I asked the Magic 8 Ball the following question: “Will mortgage rates be higher or lower than 4% in August and September.” I shook the Magic 8 Ball and I waited for the answer to float to the top.

Here it is: Yes!
1 vote Thank Flag Link Wed Jun 1, 2011
Rates are already below 4% depending on the loan program - 15 year fixed, 3/1, 5/1, 7/1, & 10/1 ARM's are all under 4% (may be tough to find 10/1 ARMs under there but the remaining should be fairly easy).

You are probably asking about 30-year fixed rates though, since those are most popular, and by large most lenders are still in the mid to upper 4's on a 30-year fixed if you are talking about no points. Paying points it's possible to get it under 4% (a lot of points to get it there).

Like others said, absolutely no one on earth knows what interest rates will do in August/September, let alone tomorrow. There are "trends" to interest rates, where they will head in one direction for a majority of a time period (like for the past ~4 months they've been trending downwards), but on a day to day basis, or when that trend will reverse itself, no one knows.

If you are interested in what makes mortgage interest rates tick on a day to day basis, it's the prices of mortgage backed securities (MBS) increasing & decreasing. What makes the prices of MBS's increase & decrease? Financial data mostly.

http://www.mbsquoteline.com/understanding.php has a very good explanation on what makes mortgages rates change.
1 vote Thank Flag Link Wed Jun 1, 2011

What you need to do is Sit down with a Good Realtor and And a Mortgae Broker, Have a Buyers Information Meeting, Get Information about Loans and Understand the Process of Purchase....ask all the questions you may have.......all your Many Questions on the Forum is getting you siuch diverse answers....you are going to be confused! Also, if you think you can TIME the Lowest Interest Rate/s and Lowest Prices, you are NOT being Realistic! You are either READY to Buy a Home for you and Family, or you are not....you could be dancing this game for the next few years....insyead of getting on with it and getting your Home.......unless you like paying RENT....someone elses Mortgage for them.....
No one here is Psychic to tell you what the rates or prices will do.
So, Contact a Realtor, me, if you so choose, Have those Conversations - I can refer you to an excellent Mortgage Broker too......and make an Informed choice and move forward....
Be well and Safe, Regards,
0 votes Thank Flag Link Wed Jun 1, 2011
Right now, interest rates are in the 4 3/4% range.
Now here's the $64,000 Question; "What year were they lower than that?" I could give you a 5 or even 10 year leeway on that answer and you propably wouldn't get it. Because, even Baby-Boomers (I am one) haven't seen rates this low!
The only people who haveseen these rates in the last 60 years, are some Veterans; and I say it that way because between 1955 and 1994 most Lenders did not want to handle a VA loan. It was very hard to get.
My point would be; the benefits of getting a loan now, far outweight the jeopardy of waiting and hoping: Have your loan officer calculate the loan at 4%, 4 3/4% and 6%.
0 votes Thank Flag Link Wed Jun 1, 2011
As Shane points out…it depends on the loan program. And even if you are insinuation about the 30 year fixed rate mortgage program, it is currently possible to “buy down” the interest rate below 4%...but depending on your situation this may not make sense.

You seem to have a lot of questions ranging from purchasing a home to mortgage programs…I would suggest that you familiarize yourself with a Realtor and Mortgage Broker/Banker of your choice to help address all of your concerns.

These days there are a lot of very good Realtors and Mortgage Professional that would jump at the chance to assist any homebuyer as they research the possibility of buying a home in this market. Just be sure to interview several Realtors (whom are knowledgeable of the areas you are interested in purchasing) as well as a few mortgage Professionals.

By the way…lacking any additional government purchasing of MBS, all indicators suggest it’s not very likely long-term mortgage rates will fall any further...but then again, my crystal ball hasn’t been working very well lately!
0 votes Thank Flag Link Wed Jun 1, 2011
Unfortunately none of us can predict the future....
0 votes Thank Flag Link Wed Jun 1, 2011
If someone knew, they would sell the answer for millions because there are billions to be made on that type of information.

If it makes sense to refi, then do it. If you are waiting to buy because the rate is not under 4, then you should reevaluate because rates are not a reason to buy.
Web Reference: http://fredglick.com
0 votes Thank Flag Link Wed Jun 1, 2011
Since nobody has a crystal ball, this is difficult to answer. However, if they do, I'll be first in line for a re-fi !
0 votes Thank Flag Link Wed Jun 1, 2011
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