Question Details

Monicam, Home Buyer in 07310

Morgage rate Predictions - A few weeks ago I could have gotten a 30 yr fixed Jumbo at 6% .. I didn't lock it

Asked by Monicam, 07310 Thu Jun 12, 2008

thinking that they would drop down.. now its risen to 6.5%.. I'm expecting to close in Oct.. any chance they will drop back down to 6% or lower between now and Oct?

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Here is what I have been telling folks that are in the same unfortunate position in this market.
Do you gamble? Your answer should determine what to do. Most Lenders have a floatdown policy. If you lock now and the market improves by a certain percentage of basis points you should ask for a rate renegotiation. Understand that every Lenders policy is different so ask before you lock.
0 votes Thank Flag Link Thu Jun 12, 2008
I'm sorry to read that you are in this prediciment, locking an interest rate is a very difficult real estate decision and should never be taken likely. As you have seen things can change quickly. Ultimately the best advice is to seek the advice of a seasoned professional (25+ years of experience in mortgages) and to learn a little about rates yourself so that you can feel good about your decision.

If anyone claims to be able to answer this question for you they are lying. A person can no more predict what will happen with interest rates any more than they can tell you what 1 share of IBM stock will be selling for at the end of trading tomorrow. Sorry to throw water on your hopes but that is simply the reality of an open market.

There is a little hope for you though if you want to do the work of paying attention to a couple of key items. Here is what you will want to look for, but keep in mind that nobody is able to predict these things with any accuracy; this is unfortunately a decision you will have to feel good about and make on your own.

Unemployment and inflation are huge players in bond rates (which are the basis for mortgage rates), if you see either of these increasing be assured that rates will follow suit because both erode the future return of a fixed rate instrument like a mortgage.

If you are going to watch any one bond, my advice is the 10 year T-Bill. Also keep an eye on the stock market. Another good general rule of thumb is that as the stock market falls, money flows to bonds and therefore improves interest rates. Bad news for the stock market is generally good news for mortgage interest rates.
0 votes Thank Flag Link Thu Jun 12, 2008
I don't think they will go any lower. On cnbc today they were saying that the fed is looking at raising rates. As a loan guy, I think they already hit bottom. I don't think I would wait anymore.
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0 votes Thank Flag Link Thu Jun 12, 2008
No. Ben Bernanke's new target is inflation, and the rise is due to expectation that the Fed will raise rates. When it does, it will be a long time before they come down.

It's possible that the rate will rise further before October too, and most lenders will lock a rate in for only 30 days. Check with your lender to see what your options may be.
0 votes Thank Flag Link Thu Jun 12, 2008
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