Always remember that predicting anything to 100% accuracy is nearly impossible to do. However, using some information from mortgage interest rates, and their trends, I think we can make a pretty accurate mortgage rate prediction for 2009.

Early in 2009, mortgage interest rates were at near all time lows. Mortgage interest rates of 4.69% for a standard 30 year fixed rate mortgage were easy to be found. Homeowners who got into an ARM loan may have been paying as low as 4%, for awhile at least. However, with the Obama stimulus plan in effect, and homeowners everywhere looking to take advantage of these low rates through refinancing and mortgage modification, something had to be done. As a result, mortgage interest rates were increased by .5% across the country to stop the mass amount of homeowners applying for refinancing and loan modification. While this interest rate increase halted homeowners looking to save money, it was not a big enough increase to stop homeowners from losing their home to foreclosure and mortgage default.

With that in mind, I predict, that around October of this year, interest rates will drop to their prior lows of around 4.69% for 30 year fixed rate mortgages. This is because by that time, the lenders and banks would have been caught up with the pending refinancing and mortgage modification applications from before and looking for more business. The interest rates will be lowered to spark interest of homeowners looking to save money, or their home. Once they become overwhelmed with applications, interest rates will spike up again a little. I do not think that interest rates will raise much from 4.69% until April of 2010. However, anything can happen.

Homeowners who are facing immediate financial problems, or are going to lose their home, should act now and do something about the problem. Homeowners who can wait a little, should, and see just how interest rates will go. Like I predict, around October of this year, rates will drop a little.

-M Petrone

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