WASHINGTON- 30-year fixed mortgage rates drop to 4.93% for the second straight week, showed by a report on Thursday, but still are above than the lower record of last years. 

This week, the average rate on a 30-year mortgage was recorded 4.93% that was 4.97% a week earlier, stated by Freddie Mac mortgage finance company.

In the beginning of December, a drop in the rates recorded to low of 4.71%, drooped in the response of government’s campaign to shrink the borrowing costs of consumer.

Mortgage rates were collected by Freddie Mac from Monday to Wednesday every week from the lenders of the whole country. Fluctuations occur on rates even on the same given day and often in line with Treasury bonds (long-term).

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You can save your money in 2010 By refinancing your loan at low interest rates, Because Mortgage rates will hopefully go downward up to some extent. You will end up with saving hundreds of dollars on your monthly mortgage payment. It is extremely important to find out what interest rate you will qualify for before you refinance your loan.

Purchases are expected to begin as soon as next week and up to $500 billion will be bought. that’s why possibly it will go into the 4.5 to 5.0% range that everyone seems to be talking about. I reserve the right to be wrong.

As interest rates decline, investment customers can become more or less interested, depending upon the direction of economic growth, inflation, appetite for the given product, and several other factors. The lower those rates get, the fewer investors are interested in putting them on their books. There are many kinds of bonds available, and mortgage rates rise and fall with those competing investments to a greater or lesser degree.

However, there is a significant amount of uncertainty compared to previous years due to the fallout from quantitative easing. So it’s hard to affirm they will go down in 2010. That’s a multi-billion dollar guessing game. If rates move substantially lower you can refinance, again. But the government only controls short-term rates by Fed rate cutting. The market determines long-term rates.

There is very much possibility that Mortgage rates will go up from the start of the year 2010.There was very mix trend occurred during whole December 2009. We saw it once at 4.49% level and also saw it on 5.35% level in December.

“Rapid change in December will assist the output to rise further in the coming months, and it `ll bring more weight to the view that the U.K. exited recession by the end of 2009,” said by  A senior economic advisor to the Ernst & Young ITEM Club.

Interest rates for home loans have already begun growing upward.  Many experts and market observers expect them to head even higher as the Federal Reserve winds down its program to buy $1.25 trillion in mortgage-backed securities before first quarter of 2010 end. Two factors are to be considered while estimating mortgage rate, Treasury bills and Economy of U.S.

So If you want to refinance your loan then go ahead immediately. If you continue to wait for at least March of 2010 then there is a very good chance that mortgage rates will be much more in settled conditions. Obviously exact level is not confirm that where mortgage rates will go but all signs are pointing that mortgage rates are going to head somewhat higher.

Since start of  December 2009, interest rate for mortgages have reduced to the level of 5 percent. Interest Rates have come down from last weeks’s 5.30%.  This movement in mortgage rates have sparked mixed feeling among borrowers and lenders. Basic reason behind recent movement of mortgage rates is movement in 10 Year treasury rates.

Almost all economic experts agree and relate rise/fall in mortgage rate with movements of fixed treasury rates. As 10 year fixed treasury rates have slowed down, not too much but a reasonable reduction have appeared on boards. Analysts are of the view that mortgage rate will go down further. They are not sure that how much reduction will take place exactly but surely there will be some reduction.

So today if you are thinking to refinance your loan in near future. time has arrived. Please do not wait anymore. Now is the best time to refinance your Home Loan. The Analysts also think that the mortgage rates are likely to  rise to more than 7% in year 2010. Even if you are of the views that it will be round about 6% in 2010. Still it is a great reason to refinance your home loan.

Still many mortgage lenders offer a 5% interest rate. this is the most favorable period to refinance your Home Loan. and relax yourself up to some extent. Because those lenders with 5% interest rate today will offer you a round about 5.5% mortgage rate after first quarter of the year 2010. So get ready to apply today for refinance your loan.

As the personal loans are stuck on fixed rates, some very attractive and competitive mortgage rates are currently being offered by many lenders. Thus if you have other debts in addition to your mortgage, this could be a good time to consider reviewing your finances.

It is possible that you may be paying much higher interest on your personal loans. Moreover, if you have any outstanding credit-card balances, this would mean that you may be paying between 15% and 20% interest each year.

Also, due to the recession, credit card providers are much more reluctant to give credit to new customers. This has made switching of credit cards much more difficult. It is not possible now for customers to switch their debt to another card company in order to get a zero interest rate for a while.

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According to a recent news story in Associated Press, It is highly unlikely that Federal Reserve Bank will change the key interest rates any time soon. Since the interest rates are currently at historic low for some time now and practically this is as low as Fed can keep them to kick start the jammed US economy. Despite the faint signs of improvement in economic activity, Fed is not likely to touch the rates at least not for next two quarters.

After spending more than a year in deep recession, US economy finally started to grow in the last quarter. The rate of growth is very minimal and no one knows if the growth can sustain itself over next few quarters or not. So far the economy is running on essential life support system provided by federal government.  It is yet to be seen how it performs without oxygen mask.

The Core policy making team at Federal Reserve Bank of America resumed its meeting on Wednesday morning. They are likely to discuss and analyze available economic and financial data over the period of next two days.

Although their is some data that indicates the recovery but still the rising un-employment and non-availability of easy credit to individuals and small business owners are some of the factors that are putting a drag on faster recovery from recession. Commercial and residential real estate markets have yet to coup with the impact from loans that went bad and took along them many a banks.

Mortgage rates are still very high. In September, when the key policy makers of Fed met, the team outlined  a very pragmatic plan to bring the mortgage rates down for the main street consumers and try to kick start the housing sector. It is very likely that we will see some positive movement in the same direction at end of current meeting.

Since the inflationary effect of recent stimulus packages is almost none, Fed might try to take some drastic measures to keep Prime Mortgage Rates at or around 3.25 percent. These measures, that would seem stupid if seen out of context, include pushing the target rate for it bank lending further down and keep it between zero percent and 0.25 percent. This will impact all aspects of economy as the commercial bank’s prime lending rate is used as a yard stick to determine interest rates  for home equity loans, credit cards and other types of consumer finance products.

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Again there has been a fall in the U.S. long-term fixed mortgage rates. The rates fell for the third time in four weeks. The rates have slid down up to lowest level in six-weeks.
In the week ended on July 9, the average 30-year rate have declined to 0.12 % point to 5.20 %, it was said by Freddie Mac on Thursday.

The rate was 6.37 % a year earlier; it is said by the second-largest U.S. home funding company.

In a statement it was said by Frank Nothaft, Freddie Mac’s chief economist, that the Interest rates for 30-year fixed-rate mortgages have fallen for the second week in a row to the lowest level in six weeks amid market concerns over a weakening labor market.

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It had not been long since we expected that mortgage rates will go up in next few months. The prediction for mortgage rates to go up was made because investors were sidelined and inflation was likely to rise. The downward spiral in home prices and the global financial crisis scared the already shaking investors a bit more. But all is not bad news. If you are planning to buy a home during this crisis, you might strike a deal of your life if the rate for mortgage finance and refinance go down in 2009.All investment pundits are predicting that home finance rates will go down in 2009 compared to 2008. Let’s analyze the main factors or fundamentals of mortgage rates movement. Economic outlook, inflation trend and Government policy… all these factors are signaling that we have lower interest rates ahead of us.

Already the mortgage rates being offered are very very attractive. National average for 30-year Fixed Mortgage has fallen to below 5.6% in December 2008. It is way down from 6.6 percent just 7 weeks before that. following are the main factors that in my opinion will influence the 30-year fixed rate mortgage and 15-year variable rate mortgage. If you act as a wise consumer, you can get great benefits from this knowledge and use it to protect your depleting wealth and equity in your house.

Yes! Mortgage rates will go down in 2009

30-year fixed mortgage rates will start from 5.5% and keep dropping till June 2009. from there as economic conditions in overall economy will start to improve the mortgage rates will move up again and might hit 6.5% by end of 2009.

Still at these rates, getting a home finance loan is not a bad deal. It’s still very attractive loan rate. There is no evidence available to suggest that home finance loan rates are likely to go up as the market is stalling. plenty of inventory is already out there. The economic conditions never change quickly and there will always be a window available to get the best deal on home loans. My prediction is that this window is already open and will remain open till June 2009.

I see 6 Factors that support my 30-year fixed rate mortgage outlook as i predicted above.

1. Deflationary Pressure

2. Global Recession

3. US Government Policy

4. Housing Market Mess

5. Poor Credit Scores

6. Wait and See Attitude

Deflationary Pressure:

With announcement from world bank, world is officially in the worst recession since World War II. Inflation is a thing of past. we are facing worst of deflation in our country. Core consumer price index has fallen sharply (mainly due to lower oil prices). Yields on Govt. securities like bonds and treasury notes in hitting bottom. It is interesting to note that 30-year Fixed Mortgage rates mostly follow 10-year Treasury Notes. Deflation will rule most of 2009. this will help keep the loan rates down.Recession

Recession:

The National Bureau of Economic Research recently announced that the United States did indeed enter a recession in December 2008. While predictions as to the duration and depth of the recession vary, economists at Goldman Sachs recently revised their original forecast in the face of deteriorating economic news. “This deepens and extends the expected recession, bringing the drop in GDP close to the decline seen in 1982 (2.3% in our forecast versus 2.7% then),” the economists said in the report.

Government Policy:

The massive bailout initiatives that governments around the world are now undertaking will undoubtedly lead to renewed inflationary pressures but as we can read the fine print of these spending plans, we are unlikely to see any material effect before first quarter of 2010.

The Mess in Housing Market:

The drop in home prices, mixed with rising mortgage delinquencies and foreclosures, has forced investors to demand higher rate of interest on their investments especially in securities that are backed by home loans. Resulting in increasing spreads — you can clearly see that difference between 10-year Treasury Bond yields and 30-year fixed mortgage rates has increased significantly. Home prices are expected to continue the downward spiral, at least till June, 2009 — and mortgage delinquencies increasing at alarming pace — this “risk premium” would remain High. “We’re not going to get back to the same tight relationship between the 10-year [Treasury] bond and fixed mortgage rates any time soon,” says Bill Cox , a mortgage lender from Illinois.

Poor Credit Scores :

Even if the mortgage rates will remain low in most part of 2009, a large number of people will not be able to benefit from these.(May be this is another reason for rates to be down). People’s credit scores are hitting rock bottom due to increased borrowing and Job situations. 1 in every 15 American is jobless.People who already have adjustable rate mortgage and want to take advantage of lower interest rates are unable to do so. The decrease in housing prices have eroded the home owner’s equity and most of them have negative equity. They are unable to refinance home mortgage loans due to negative equity, meaning they owe more on their mortgage than their home is worth. As a result, they will not be eligible for refinancing. There not a great number of  potential home buyers in the market these days.

Wait and See Attitude:

Even though, the loan rates are attractive today, people are in no hurry. They understand the economy better than year ago and know that 30-year mortgage rates are not likely to go away if they don’t hurry. they know they have enough time. Blogs like ours are helping in spreading the message. People are convinced that home loan rates are low and will remain low for considerable period of time and they can get their sheet together before taking another debt obligation.