Why haven’t mortgage rates moved lower this week if the yield on the 10 year treasury has continued to move lower the last 3 days and now at historic lows? I’m looking to lock a rate for a 30 year fixed mortgage but I’m getting a quote of 4.625%. That is what I was quoted last Friday. I have impeccable credit and I’m putting 20% down. From what I can tell, the historical spread between the 10 year treasury and a 30 year fixed mortgage has been around 1.75%. So with all of the recent downgrades is the market now demanding a spread of about 2.5%?
10y yields are low because the Fed just announced that they’re expecting that we’ll be in near-recession or recession for the next 2 years. This means that employment is going to be weak or declining, and housing prices are going to go lower. It’s simply extra risky to lend to people who don’t have a printing press to pay back their debts, and spreads reflect that. It’s not a judgement about your specific creditworthyness, I’d venture.
Quite whining and just sell some of your lumber yards.
I refi’d today. Cost me $0 and locked in 4.375%. Could have paid the closing costs and got 4.25%.
Sweep the Leg Wrote: ------------------------------------------------------- > I refi’d today. Cost me $0 You sure about that?
mwvt9 Wrote: ------------------------------------------------------- > Sweep the Leg Wrote: > -------------------------------------------------- > ----- > > I refi’d today. Cost me $0 > > You sure about that? As far as upfront costs go, yes. I’m sure if you reread my post you’ll figure out where the cost was embedded.
4.5 yesterday with no points and like 2k in closing costs (quicken loans). Just starting to shop, but seemed OK. I doubt you’ll pay not one dollar in costs associated with the loan Sweep, but props to you if you do. Maybe no upfront costs (how mine is), but it’s because I’m rolling the 2k into the loan.
> yield on the 10 year treasury vs > 30 year fixed mortgage I’d say your basis risk spans 20y. 
Chalk it up to http://en.wikipedia.org/wiki/Yield_curve#Market_segmentation_theory . To the usual explanations of 10y-30y spread, you also have to factor in the recent increase in risk-on/risk-off investor behavior, and QE 1&2 (which didn’t include buying 30y treasuries IIRC).
I may need to shop it around, currently paying 5.25%. Hmmmm, at what point does it make sense to refi?
brain_wash_your_face Wrote: ------------------------------------------------------- > I may need to shop it around, currently paying > 5.25%. Hmmmm, at what point does it make sense to > refi? http://www.smartmoney.com/calculator/real-estate/should-i-refinance-my-mortgage-1302835660427/
brain_wash_your_face Wrote: ------------------------------------------------------- > I may need to shop it around, currently paying > 5.25%. Hmmmm, at what point does it make sense to > refi? A general rule of thumb is if you can get it for 1% less than what you’re locked in at now. The most common way to illustrate the benefit of refinancing is looking at the breakeven number of months it’d take make up for the closing costs (total costs/monthly difference in mortgage payment). Most “experts” will say anything 12 months or less is a definite go, but it’s all up to you. A huge factor most people forget to consider is you get to skip a mortage payment when you close. For example, I’m closing next month so I won’t have to make a payment in October. That by itself should come close to, if not completely, washing out the closing costs. Be sure to shop around, and ask your mortgage broker about ways to reduce closing costs. As I stated above, I could pay all the closing costs and get 4.25% or have the costs built in (bankers call it a “lender credit”) and pay a slightly higher rate, 4.375% in my case. Without knowing your situation, at 5.25% I’d be willing to bet refinancing at current rates is a no-brainer.
http://money.cnn.com/2011/08/11/real_estate/mortgage_rates_record/ In the tumultuous days following Standard & Poor’s debt downgrades, rates on 30-year fixed mortgages fell to 4.32%, down from 4.39% last week and closed in on a record low of 4.17% set last November, according to Freddie Mac’s Primary Mortgage Market Survey.
The fact that no one picked up and ran with my lumber yard comment is a most disappointing revelation about AF.