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Mortgage rates chug along

By Holden Lewis ·
Wednesday, June 2, 2010
Posted: 9 am ET

Mortgage rates have settled into a groove since last Thursday. Yields on mortgage bonds have chugged along at more or less the same level since then, and that implies that mortgage rates haven't moved much, either. Today is the day when Bankrate conducts its weekly rate survey; I predict that it will say that the benchmark 30-year fixed is 4.98 percent this week, up from 4.92 percent last week.

The Mortgage Bankers Association says there aren't many people applying for mortgages to buy homes; most customers are applying to refinance their current loans. Purchase applications are at their lowest level since April 1997, according to the MBA.

It's easy to figure out why home sales are down so much. The homebuyer tax credits stole home sales from the future. We might come to regret this policy choice, because we will discover that some homeowners bought a few months too early, with an insufficient financial cushion. Some people will lose their homes because they bought in March instead of saving more money and waiting until the end of the year.

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Holden Lewis
June 04, 2010 at 12:23 pm

I'm not qualified to answer that question. I suggest starting out by guessing what you think will happen to the prime rate over the next few years. The following calculator will point in the general direction of the size of the payments you would have to make to pay off the HELOC balance. You can look at your rate forecasts and run a few scenarios: borrow and save now, or save now and borrow later.

June 04, 2010 at 10:28 am

We will be ready to remodle next year but feel pretty certain that interest rates will rise by then. How can we calculate whether its best to draw out cash now and place it in an interest bearing account and making the mtg payments before the work is done vs taking the loan out when rates are higher? My credit scores are 803,809 & 821. We will be borrowing ~$300k

bob westover
June 03, 2010 at 12:29 pm

I would like to send a big thankyou to Greece, Portugal and whatever other country decided to tank financially in the last month. My 4.1 rate that I just locked into last week was the best present I could have asked for. I just may have to spend some american dollars there in the future especially since they are worth a lot more than they used to be. Wow..a 2 for 1 from several country's that don't know me from Adam. How do you say thanks in Greek?