Homeowners everywhere are very interested as to where home mortgage interest rates will be headed for the remainder of 2009. With the bad economy, President Obama has announced a “Making Home Affordable” homeowner bailout plan, which could have an impact on interest rates for home mortgages in 2009. Here are my mortgage rate predictions for 2009:

As far as interest rates go for home loans for the remainder of 2009, I predict that until around October or so, that the rates will remain the same as they are now (Average is 5.19%) and then in November or so, they will drop around .50%.

I think that the recent interest hike that occurred was due to mortgage lenders and banks being overwhelmed with paperwork, and raised the rastes to curb the flow of refinancing applications. Mortgage lenders and banks will use this time, while rates are a little higher, to approve and go through all the applications they have pending. Also, this means that only homeowners, in the most dire of need to save their home from foreclosure, will apply. This gives the lenders a chance to save a lot of people from foreclosure as opposed to helping save people just save money.

Once November hits, the refinancing applications should be all completed and the lenders and banks will be hungry for more work. Then I think that the rates will decrease around .50% or so, meaning that the average interest would be around 4.69% for a fixed rate 20 year home mortgage.

Refinancing and loan modification are good options right now, even with the slightly higher interest rates. A lot of homeowners can not afford to wait, and its ok, the rates are still pretty low. However, if you can wait a little longer. The interest savings will easily add up to a few thousand dollars, even with a slight savings of .50%.

-M Petrone

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