By Clayton Closson
Mortgage rates are at historic lows. We know that.
But for how long?
Nobody knows for sure. That’s a given. But all the signs are starting to point to mortgage rates going in one direction. Up. And probably in the not-so-far-away future.
Chief Economist Bob Walters explains it all in this video. He talks about how short-term rates (the Fed Fund rate) are already at zero. That means they can’t go any lower. Long-term rates (30-year fixed, for example) are down to levels Americans haven’t seen in decades. Since Eisenhower was president. And I Love Lucy was a brand new TV show. That’s a long time, friends.
Walters discusses a speech Federal Reserve Chairman Ben Bernanke gave on March 1, 2013 in which Bernanke gave a forecast of the 10-Year Treasury rate, which could rise significantly by 2017. This is important, because the 30-year fixed rate traditionally is about 2% higher than the 10-Year Treasury rate. So if the 10-Year Treasury rate rises to 5%, guess what happens to the 30-year fixed rate? You guessed it. It goes to a whopping 7%. The funny part is that my first VA loan was a 30-year fixed in 1998 that was 7.25% and I thought I had won the lottery. My friends congratulated me on getting such a low rate.
You won’t feel like you won the lottery if rates rise to 7% and you miss out on rates in the 3%-4% range. No, you’ll feel like you lost a lot. And you will have.
So don’t wait. If you can refinance at today’s rate, you should. What are you waiting for?
Check out the video and let us know what you think.
If the video does not play, click here.
Bob Walters is the chief economist at Quicken Loans. Walters joined Quicken Loans, then Rock Financial, in 1996 after holding positions at both NBD Bank (now owned by JPMorgan Chase & Co.) and DMR Financial Services.
Link to original article: http://www.quickenloans.com/blog/chief-economist-bob-walters-mortgage-rates
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