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I have heard talk about the government pushing mortgage rates to 4.5%. Should I refinance my ARM now, or wait until this happens?
Jack R. in Savannah writes:
Stephen, I have heard talk about the government pushing mortgage rates to 4.5%. Should I refinance my ARM now, or wait until this happens?
Jack, I have heard the rumors as well. We all want lower interest rates but I doubt that this plan will be implemented. First of all, the government doesn’t make mortgages or set rates, the large banks do. In order for the government to push rates down to that level they would have to invest upwards of $100 billion in the secondary mortgage market. This would be of little help in slowing foreclosures or stimulating the housing market, as the availability of credit for those who need it most, would still remain tight.
Jack, the upside to all this talk is that the bond market has rallied on this speculation and pushed interest rates to their lowest point in 45 years, even without government intervention. My advice is to research a “no-closing cost” refinance. That way you can take advantage of the historically low rates now and still be in position to refinance later if government action brings rates down further. As this situation changes daily, please feel free to call me for the latest updates.
Stephen
If you have a question that you would like me to answer please email me at Stephen@katzmortgageteam.com.
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