Mortgage rate predictions for 2009 can be a little tricky to predict. However, we do have some solid information to use and make a good prediction from. Here, I will predict mortgage interest rates for the rest of 2009, and a few months into 2010.

Mortgage interest rates earlier in the year were around 4.69% for a typical 30 year fixed rate mortgage. These represented the lowest interest rates of the year, and homeowners jumped at the chance to refinance or get a home loan modification. When they did, mortgage lenders and banks quickly became flooded with applications. As I expected, the interest rates were increased by .5% or so just after the rush of refinancing and loan modification applications came in. I think that the rates were increased to their current average of 5.19% in order to give mortgage lenders and banks a chance to catch up with all the paperwork. This small interest rate increase made homeowners just looking to save money pause, while it still was low enough to allow a lot of homeowners a chance to save their home from foreclosure, or themselves from defaulting on their mortgage.

This is where my prediction comes into play. I predict that sometime around the middle of October 2009, mortgage interest rates will drop by .5% to their prior lows. This will be around the time mortgage lenders and banks are ready for a whole new wave of homeowners looking to get a refinancing or mortgage modification. I think these rates will last through April of 2010. If you can, wait, if not, take action now. The longer you wait, the worse the financial problems will get. Take action now.

-M Petrone

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