Where are rates headed?

As I have said MANY times before, “If I really knew the answer to this question, I would be on my boat in the Bahamas!” (Someday….) However, with over 25 years of experience in following interest rates, reading the pundits and trying to analyze economic and political trends, my best guess is: rates are headed UP! Now this guess doesn’t really take a Wall Street analyst. Since fixed interest rates were recently the lowest since the Eisenhower Administration, the chances of them moving much lower are slim to none. And Slim is on his horse out of town! Fixed mortgage rates have been trending higher since last Thursday (March 13). For example, a 15 year fixed rate was 4.75% at zero points. That same rate now costs 2 points (which is the rate I usually include quote at the bottom of my articles). For a zero point option, add about a half point to the rate.

When I’m asked if I think the rates will return to last week’s lows and if someone should refinance now or wait, I usually say do it now! Today’s rates are STILL unbelievably low and squeezing the last few dollars out of the market probably aren’t worth the risk of missing this opportunity. Yes, the rates may soften a bit as the geo-political issues that are going on in the world continue to unfold, and you may be able to catch a quarter point better rate on a certain day. But, whether you pay the points and take the lower rate (or pay no points, and sometimes even no fees!) my gut feeling is that in a year from now, you’ll be congratulating yourself on what a financial wizard you are and how low your monthly mortgage payment is. However, if I knew for sure…

Fixed Mortgage Interest Rates for loans under $322,700 as of March 20, 2003 (a.m.) are:
30 year fixed: 5.375% (APR 5.651%) payments are $1,807.03/mo
15 year fixed: 4.75% (APR 5.21%) payments are $2,510.06/mo.