Where are interest rates headed?
The Federal Reserve chairman nominee, Ben Bernanke said today U.S. inflation was higher than "desirable rates" in the long run but focusing on the long term trend would be the most important monetary policy going forward.
Bernanke told a Senate Banking Committee that it was important to look beyond short term volatility in inflation rates especially in the face of higher energy prices the economy has been experiencing.
Mortgage rates as influenced by the 10yr treasury have been under pressure in the last few weeks. Platinum Home Loans does expect 30yr fixed mortgages to fluctuate in the next six months between current rates of 6.125 to the mid six percent range. Rates always rise when the economy is improving.
Rates, however are still near 40yr lows and while the refinance & purchase markets may pause to get adjusted to slightly higher rates Platinum Home Loans fully expects to see a steady flow of refinancing due to the following factors;
* Consumer debt continues to rise and the creditors will continue to raise the interest rates on this consumer debt as rates have risen. The creditors will be forced to raise their rates as their cost of capital increases as well.
* The recent trend in mortgage financing of selecting Adjustable Rate Mortgages will have to be corrected before or during the adjustment period
causing an active refinance market.
* The increase in home prices will cause many homeowner's to stay put in their current residences but will likely keep the renovation market brisk
* The backlash of exotic mortgage products like the interest only and the Option ARM. Many of the homeowner's that were not properly explained the downside to these products will come to realize the downside. These homeowner's will look to correct that poor product choice with a mortgage more appropriate for their needs.
Interest Only and Option ARM mortgages are great products for the right client. However, the popularity of these products leads Platinum Home Loans to believe that the mortgage lenders are not looking out for the best interests of their clients and are choosing to confuse the consumer with the initial teaser rates with no discussion of the risks and downside to these exotic mortgage programs.
Platinum Home Loans also believes that many loan officers do not fully comprehend how these mortgage programs work. My message to all mortgage shoppers is ask many questions and to shop around and talk to experienced loan officers and reputable banks before making a final decision on what lender to use and what mortgage program to choose.
Platinum Home Loans is expecting in the days leading up to Thanksgiving 2005 that the bond market will see a rally and with this rally will mean lower rates and likely means lower interest rates for a two to three week period. That being said, Platinum Home Loans advises anyone currently refinancing or under a purchase contract to lock in your rate due to the recent volatility. Gambling with your long term financing does not make sense in our opinion.
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Platinum Home Loans is committed to being the lowest cost mortgage provider in Connecticut. We admit it's impossible to advertise the lowest rate. It is extremely easy to advertise one rate while delivering another but Platinum Home Loans believes we will close your CT mortgage at the lowest rate and promote our best rate guarantee for that very reason.
Michael K Potts
Manager
888-204-3232 X 81 |
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