Mortgage rates have been all over the place this year, but recently have gone up. Homeowners who are able to refinance or modify their home loan when interest rates are lowest, stand to save the most money. Here are my mortgage rate predictions for 2009, and how I came to them:

Although still considered low, right now mortgage rates for a typical 30 year fixed rate mortgage are around 5.19%. This is a little higher than earlier in the year when mortgage rates were 4.69% for the same loan. However there is a reason the rates were increased, and a reason they will go back down again.

I think that mortgage rates were increased because of the surge of homeowners applying for a refinancing when the interest rate was 4.69%. This led the banks and mortgage lenders to become quickly overwhelmed with paperwork. As a result, interest rates were increased by .5% to stem the tide of homeowner applications. This rate increase was just enough to stop the flow of applications, but not enough that homeowners who need to save their home through refinancing wont be able to do so.

I predict that mortgage rates will drop again to their prior lows of 4.69%. I think that this will happen around October of this year, and these low rates will last through at least April of 2010. These low rates will almost certainly spur a new wave of homeowners looking to refinance. Mortgage lenders and banks will be better prepared this time around to handle all of the applications. Homeowners should wait a few weeks if they can, and watch the rates drop then make their refinancing move. Otherwise, if your at risk of losing your home, take action now. The longer you wait, the worse the situation will get.

-M Petrone
www.RefinancingCondo.com

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