Predicting mortgage interest rates for 2009 can be especially tricky. However, I think I have a good idea of what to expect. By refinancing a mortgage, or purchasing a home when rates are their lowest, you can save thousands of dollars, from just small interest rate changes. Here are my home mortgage interest rate predictions for 2009.

Just a few weeks ago, home interest rates rose .5% for the first time in months. This is not due to a stronger housing market, it is due to mortgage lenders and banks being overwhelmed with modification and refinance applications. The rates were increased from their prior all time low of around 4.69% in order to slow down the applications, and let the lenders and banks catch up on the overwhelming amount of paperwork they are buried in. By increasing the rates a little bit, the loan applications will slow down, but homeowners truly in need of refinancing or modifying their home loan will still benefit and do so, even with a .5% higher interest rate.

This plan is working and the rate of applications has been reported to be slowing down. Now the lenders are catching up and being able to start to offer new and more loans to borrowers. However, things will not stay like this for the rest of the year.

I think that around the middle of October of this year, the home interest rates will once again drop by around .5% to their prior low of 4.69%. By October the applications from homeowners who wanted a refinance or mortgage modification will be dealt with and the lenders will be hungry for another round. Lowering the rates will open the flood gates of desperate homeowners, especially in this economy, who need to save money to pay other bills, or even save their home from foreclosure.

So, if you can wait a little longer, do so. However, if you are at any kind of risk of losing your home, or are facing a financial hardship, refinancing or mortgage modification right now will most likely be very effective for you, the rate of 5.19% is still very low. See how much you could be saving and call your lender or bank now and ask about a refinancing or loan modification.

-M Petrone

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