Many homeowners have taken advantage of the near record low mortgage interest rates that have been dominate in 2009. However, I predict that homeowners will see an interest rate increase in 2010. Here is how and why I think mortgage rates will rise in 2010, and how this can effect homeowners looking to refinance a mortgage.

Ultimately, it is impossible to predict with 100% accuracy anything that is in the future. However, there is some good indications that make me believe mortgage rates will increase in 2010. This increase, will be small and will come out to be around 1.5% higher than current rates, but that is enough to cost a lot of money to homeowners, and negate any potential mortgage refinancing benefits for some people.

Currently, home interest rates are around 5% for a standard fixed rate 30 year mortgage. However, I think that this rate will not be getting any lower, and will actually rise to around 6.5% throughout 2010. The interest rates available now are so low due to a horrible housing market, and big money Government housing stimulus programs designed to keep rates low, and make refinancing very beneficial for a lot of people. An additional 1.5% in interest can easily eliminate benefits of refinancing a mortgage for many people, and cost others a lot more money than if they were to refinance now at the lower 5% interest rate.

I think that the reason interest rates will rise in 2010 is due to a better economy, and an improving housing market. I believe that the housing markers worst times are over and while things may not be getting to the level they were at a few years ago, they will improve. As homeowners situations improve, and homes regain their value, homeowners will find it easier to make the mortgage payments, and prevent financial situations from letting them lose their home. The low rates available now were meant to help people prevent their home from being lost, and provide stability to the housing market. For the most part, that is being accomplished, and homeowners are finding relief through mortgage refinancing and modification.

Even with my predicted 1.5% 2010 mortgage rate increase, homeowners will still see many benefits from refinancing. The only thing is though that while still beneficial, it will cost them a lot more over the long run. While 1.5% seems like a small number, it adds up to a lot of money over the course of a large 30 year loan. Homeowners should take advantage of current low rates and look into refinancing a mortgage. If you wait too long, I predict it will cost you more money.

-M Petrone

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