For homeowners who have been waiting for rates to fall even further
before refinancing, it might be time to pull the trigger on a deal.
Rates are moving up—and could stay higher for a while, experts say. The
average rate for a 30-year fixed-rate home loan has climbed
approximately 0.25%, according to Freddie Mac.
While rates still are
below where they were a year ago, some economists say they are likely to
keep rising throughout 2012 and into 2013.
That means your window of
opportunity to lock in a rock-bottom rate might be closing soon. "If
you're considering refinancing, there's really no point in waiting,"
says Frank Nothraft, the chief economist at Freddie Mac. Freddie Mac,
Fannie Mae and the Mortgage Bankers Association all are projecting that
rates will keep ticking higher this year and beyond. Freddie Mac and the
Mortgage Bankers Association predict the average rate on a 30-year
fixed-rate home loan will reach 5% next year.
The biggest culprit in
rising rates: the spike in yields on 10-year Treasury notes over the
past two weeks, which rates generally track, says Mr. Nothaft. "It's a
good-news, bad-news situation. The economy seems to be finally getting
its legs back under it, and as a natural course interest rates are going
to be back up, too," says Keith Gumbinger, vice president at
mortgage-data provider HSH Associates. But if the fledgling economic
recovery falters, rates could hold steady or go back down, he says.
If
you wait until the end of the year to refinance, and the average 30-year
rate goes up as Freddie Mac projects—you will be paying $1,877 more per
year on a $400,000 home loan than if you refinanced at rates which
exist in late March, 2012.
Source: The Wall Street Journal
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