This was a great piece I came across this morning. It's true folks, as much as I would LOVE to see mortgage rates stay in the 4's it just isn't going to happen. The market has been artificially deflated by the Fed for more then a year now (one of the smart things they have done in this recession) and unless the Fed decides to extend their MBS buying program the end is clear. Rates will climb.
I disagree with the the economist from PNC, I think that the market will bear long term mortgage rates in the mid 6's. In light of continued tightened credit and investors who are still weary of the deteriorating housing market, it is my opinion that they will be looking for rates in the mid 6's before they start lining they portfolios with MBS's (mortgage backed securities) again.
Bottom line guys, if you still haven't taken advantage of these low rates then call me to lock in. If your loan is owned by fannie mae or freddie mac (almost everyones mortgage is) then appraised value may not be an issue for you with their new refinance programs. So give me a call today and I can tell you who owns your mortgage and which route is the best for you to refinance.
Stetson 801-318-4996
By Les Christie, staff writerJanuary 7, 2010: 11:26 AM ET
NEW YORK (CNNMoney.com) -- If you want to refinance your mortgage into a loan with a sub-5% interest rate, better hurry. Your window of opportunity is closing fast.
Lenders are still advertising rock-bottom interest rates, but for most borrowers, rates are rapidly rising into the 5%-plus category.
During the week of Jan. 7, the average 30-year, fixed-rate loan closed at 5.09%, according to mortgage giant Freddie Mac. That is significantly higher than the 4.71% it averaged at the beginning of the month, and experts say rates will go higher yet.
"Interest rates are up and they're not going to go down below 5% again," said Mark Zandi, chief economist for Moody's Economy.com, not for a while at least.
While home buyers are still excited about these low mortgage rates, people who already have a loan and want to lower their costs are scrambling to lock in.
A big reason for the jump is that a government program that has kept rates very low is winding to a close. The Federal Reserve has been purchasing mortgage-backed securities since early 2009, scooping up as much as $1.25 trillion worth. That has dampened rate increases by providing a ready market for the securities.
But the Fed's program lapses on March 31, when it cedes the playing field to private investors, who will almost surely demand higher rates. The Fed has already been slowing its purchasing, and that has corresponded with the recent rate increases.
As Treasury's go . . .
Not just mortgage rates have turned north. Treasury yields have as well, another indication that mortgage rates are headed skyward.
The yield on the benchmark 10-year Treasury has grown steeply over the past few weeks. It stood at 3.2% at the beginning of December and has soared to 3.84% as of Tuesday, a 20% jump.
Mortgage interest does not track Treasury yields in lockstep, but the two tend to mirror each other's movements.
Mortgage securities rates are always higher than Treasury yields because investors demand a premium above practically risk-free Treasury's.
The difference between mortgage rates and Treasury yields is usually somewhere near 1.7 percentage points, according to Keith Gumbinger of HSH Associated, a publisher of mortgage information. The current spread of about 1.2 percentage points is quite narrow.
That's bound to change, according to David Crowe, chief economist for the National Association of Home Builders. He believes mortgage rates will go up to about 5.5% by late summer. But other factors could push them into a larger-than-expected jump.
Economy bouncing back
For example, as the economy improves (it's hoped), businesses will expand production, hire new workers and open new sales outlets. All that requires borrowing in capital markets and the demand for lending will expand interest rates of all kinds.
A recovering economy also boosts corporate profits, making stocks a better bet for investors.
"Stocks tend to do better when the economy improves," said Stuart Hoffman, chief economist for PNC Financial Services. "Mortgage rates will rise to attract investment."
Hoffman's forecast is for rates to stay quite constant the rest of the winter and then elevate gradually during the spring buying season, the busiest time of year for home sales. He said they should hit about 5.5% by the end of June.
After that, the increases will slow, according to Hoffman, but still approach 6% toward the end of the year. He believes they'll cap at around 5.75% and are not likely to fall back to the 5% level again. 
