To truly benefit from a mortgage refinance, the new interest rates must be lower than your previous rate. With the housing market in the condition it is, and the economy struggling, interest rates are near all time lows. However, homeowners should take advantage of the low rates now available because I predict that mortgage rates will increase in 2010.

A typical 30 year fixed mortgage can be gotten for around 4.99% right now. This is nearly half of the rate that homeowners who purchased a few years ago pay. The rates are low because of a weak housing market, Government programs to help homeowners, and the slow economy. The hope is that with interest rates this low, homeowners will refinance and save their homes from being lost, or a lot of money in interest. Also, rates are so low to entice home buyers, and owners, to take action, renegotiate, and spur some market activity. However, I do not think mortgage rates will stay this low.

I predict that in 2010, mortgage rates will rise by at least 1% to around 6% for a typical fixed 30 year mortgage. While this does not seem like much, in reality even 1% can make a huge difference in your monthly mortgage payments. I think that this will happen around April 2010, and last throughout the entire year. This will happen due to increased housing market activity, and signs of a recovering economy. The only reason rates are low right now is because everyone is afraid of the housing market bottoming out. I think it already has and the rates will not get any lower than they are now. Once there is a little stability in the housing market, mortgage lenders and banks will want to start to recover some of their losses, and fatten the potential profits and margins for their future. The only way this can be done is through increasing interest rates.

Homeowners who have thinking about refinancing a mortgage should consider taking action sooner rather than later. I think that interest rates will rise, and that will mean many people will not be able to benefit from refinancing a home loan. If you can, take action now and ensure you get the best interest rates possible.

-M Petrone

Subscribe via email

Enter your email address:

Delivered by FeedBurner