Are Canadian Rates NEXT??

At some time rates will have to react to what is happening South of The Border-
Now may be the time to take a serious look at your own personal situation! If I can be of help let me know.

Neil "Mortgage Man" McJannet

Rising Mortgage Rates To Dampen American Dream of Owning or Refinancing
Top News
Friday, 10 December 2010 20:39
By: Faridah Huller, Editor
Miami, FL

Miami, FL—Freddie Mac’s weekly survey of mortgage rates has shown that as of Dec. 9, rates for 30-year and 15-year terms have not stopped rising since last month. The latest figures indicate an increase of 4.61% from 4.46% on Dec. 2 for a 30-year fixed-rate mortgage.

The rate for a 15-year fixed rate mortgage went up from 3.81% last week to 3.96% this week. As of Nov. 24, the rates for 30-year and 15-year stood at 4.40% and 3.77% respectively from 4.39% and 3.76% on Nov. 18.

The hikes are raising concerns that the housing market, still reeling from the recession, will take another blow. Homeowners who were planning to refinance but waited to see if rates might fall further have had their hopes dashed. Sentiments in the marketplace now are, “Don’t wait, refinance now before it’s too late.”

Real-estate experts in the media have speculated on the factors that might have send mortgage rates up higher and among several mentioned was President Obama’s tax-cut deal. The much vaunted tax-cut deal will supposedly be another economic stimulus but at the same time will stoke up budget deficits neither of which is trusted to add up to much by bond investors.

But Frank Nothaft, vice president and chief economist of Freddie Mac, sums it up best. "After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them. Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November, which for a $200,000 conventional loan amounts to $50 more in monthly payments.”

There are suggestions that homeowners caught in the jaws of an adjustable-rate mortgage should not delay refinancing into a fixed term while rates are still below 5%. Rates are still considered very low and buyers cannot expect to do any better if they can lock in at today’s rates. Even if buyers today have less money to squander, there’s never been a better time to buy because of falling home prices.

In an economic recovery, progressive mortgage rate increases are natural. But in a sickly economy, rate increases can put a damper on an already soaked ground of the housing market. Housing represents the largest part of consumer prosperity while helping to support construction and financial services industries.

Refinancing, according to some opinions highlighted in the media, will become unappealing to over five million borrowers who owe an estimated $1 trillion in mortgage debt, said Steven Ricchiuto, chief economist at Mizuho Securities USA as quoted in a Wall Street Journal (WSJ) report Friday. The figure further breaks down to roughly 26% of the total market for 30-year fixed rate mortgages with rates between 4.7% and 5.1%. The prevailing assumption is that borrowers require an advantage of a half-percentage point before they will consider refinancing as viable option.

The trouble is, those five million borrowers who just missed out refinancing at lower rates are the most credit-worthy, said Kevin Cavin, mortgage strategist at Sterne Agee in Chicago, in the WSJ report. These borrowers hold the best chance of refinancing at a time when banks lending policies are more stringent than ever.


By: Faridah Huller, Editor