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Mortgage rates continue to fall, ever lower. Today is the day of Bankrate's weekly mortgage rate survey. For the third week in a row*, we'll hit a record low for the 30-year fixed.**
In the survey conducted today, the benchmark 30-year fixed mortgage should fall to around 4.7 percent, down from last week's record 4.81 percent.
If my prediction is accurate, mortgage rates will have fallen about a quarter of a percentage point in a month. At this rate, the 30-year fixed will fall to around zero percent in 18 months. In a couple of years, interest rates will be negative and the banks will pay you to borrow money to buy a house. I recommend that you hold off on buying a house, or refinancing, until then. Why borrow at 4.7 percent now, when you can get a loan at zero percent or negative interest in a year and a half or two?
I've long believed that we should get rid of the mortgage interest tax deduction. We should do it now, while interest rates are so low that homeowners won't miss the deduction all that much.
*It'll the third week in a row if you ignore that the record low of 4.88 percent on June 9 was identical to the rate of the previous week. So you could say that we'll have record lows four weeks in a row.
**That's a modern-day record low. Rates were lower in the mid-1950s.
I predicted a fall of 15 basis points two weeks ago, and I was undershooting it. I predict the bottom will be about 4.35%. We're not done with Europe by a long shot. The volatility in the markets, especially international (for example as indicated by the Russel EAFE), is huge at the moment, pointing to another major (20%) adjustment down as wall street price adjusts for a double dip recession. Govts worrying about deficits and the end of the stimulus crapping on the states will cause it. It's 1936 all over again.