No. of Recommendations: 5
Hi moussecatcher,

I have been watching mortgage rates for a good time to refi a 7.75% 30 yr. Despite all the Feds rate cuts, home mortgage rates haven't followed.

Actually, fixed rates have indeed been settling downward gradually the whole time. ARMs have dropped incredibly also.

What are the home mortgage rates based on.

30, 20, and 15 year Fixed Programs are based on the 30-year U.S. Bonds. The bond market is a free-moving, openly traded, liquid market... so the fixed rates go along with the random whim of the public's pressure on the bond-trading companies (influenced by YOUR pension funds, mutual funds, and retirement management companies.)

ARMs are primarily indexed on either the 1 year Treasury Bills, the 11th District Cost-Of-Funds-Index (COFI), or the LIBOR index. These fluctuate according to varying influences... much more according to the Fed's adjustments than the long Bonds.

Should we expect them to come down any time soon? (sound: polishing crystal ball)

Who knows!?!

I can say this;
We are now clearly at the lowest rates in over 30 years. What happens tomorrow is a 50-50 POSSIBILITY... but weighting the likelihood of price action reflecting historical data makes an interest RISE soon a much higher PROBABILITY!

You'd have a hard time going wrong locking in your financing now.

BTW... for those seriously considering the Mortgage Freedom Account strategies, the conforming 5/1 ARM for the perfect scenario is BELOW 6%! THAT'S AWESOME!!!

The savings you could stash away, and the compounding returns on those funds over the next 5 years could do some major wealth building.

(Found my September issue of Money Magazine);
"Historically, investments made in midrecession have returned 34 percent over the next 18 months"

There's blood in the streets in the markets, the common man is terrified of investments, AND mortgage capital hasn't been cheaper in most of our adult lifetimes...

(Not to mention the indexes are at or just above long-term technical support areas...)


Dave Donhoff
Foolish Mortgage Broker & Financial Freedom Zealot!
Print the post  


Useful Resources
Our Home Center has all you need to make buying and owning a home a great experience. Get or refinance a mortgage and much more!
Buying/Selling a Home FAQ

Mortgage Professor
Offsite resource for mortgage questions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.