Current State of Mortgage Refinance Rates
Mortgage refinance rates have held steady at or near historic all time lows for the better part of 2009 and so far, in to 2010. But how long will this last? Many on the refinance mortgage streets are stating that interest rates are soon due to go up, and many feel that refinance rates could increase by as much as one-half percent very quickly.
Why would refinance mortgage rates be going up now? The US government got to work very quickly after the credit crisis reared its ugly head, post the subprime mortgage meltdown. They two programs into action in an effort to bring down keep refinance mortgage rates and keep them very low for a good period of time. Unfortunately, both of those interest rate reduction efforts are due to expire.
The first of the two government programs aimed at mortgage refinance rate reduction is the trillion dollars in buyouts of mortgage backed securities on the open market. This program helped to clear the glut of securities that were not being sold, and helped to open up the way for investors to get back in to action buying up mortgage securities. This helped to reduce the mortgage spread premium and brought fha refinance and conventional refinance rates down. The other government program due to expire is the one aimed at buying up US treasuries. This was a huge factor in keeping the 10 year treasury yield so low, for so long. Since mortgage refinance rates are dependent upon this yield for pricing, interest rates have been held low.
