Right now, mortgage interest rates are near all time lows. Many homeowners are refinancing and getting loan modifications to take advantage. However, I predict that interest rates will increase in 2010, and some people will no longer benefit from refinancing or mortgage modification. Here are my interest rate predictions for 2010, and how I made them.

Currently and for most of 2009 mortgage rates have been near all time lows. This is primarily due to President Obamas housing stimulus plan, a struggling housing market, and a bad economy. Many homeowners have and still are taking advantage and refinancing a mortgage or getting home loan modifications. However, while interest rates are around 5% for a typical 30 year fixed rate mortgage, I think things will change in 2010.

I think that mortgage interest rates, while still remaining low, will slowly increase throughout 2010 starting sometime in April. I predict that the final outcome will be that homeowners will see interest rates be around 6.5% or so for the same home loan with a fixed rate. While this seems minor, it will negate any potential mortgage refinancing benefits for some homeowners.

This mortgage rate increase in 2010 will be due to a few things. I think that the housing market has bottomed out. Unless some outrageous world event happens, the economy will regain traction in 2010. This means that slowly and surely, interest rates will increase as homeowners regain their financial positions. The market offers low interest rates right now to spur activity and encourage stability and growth. When things get better, interest rates will slowly rise.

Homeowners considering refinancing a mortgage should take action before rates rise. While it seems minor, 1.5% in additional interest can really add up to a lot of money over the course of a 30 year mortgage. Take action and refinance a mortgage today before things get more expensive for you.

-M Petrone

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