Why 4.5% interest rates may or may not happen, and why it would happen if they do...

There was recently a leak from somewhere in the treasury reporting the treasury may be working on a plan to push mortgage rates as low as 4.5%.

This means a mortgage in Madison, WI or anywhere in the United States would be offered at a historically low interest rate. The goal of the program is of course to stimulate buyers, to bring them "off the fence" if you will.

There is a ton of "buzz" about this, rumors, a lot of misinformation, and consumers need to know a few things.

First, the Treasury has not pledged to institute this program. They may create this program, and if they do, there is not a timeline for it yet. Second, even in the article the program was quoted as a First Time Home Buyers purchase product ONLY. This means that though rates, which are set by market conditions, not the treasury, could follow for refinances, there is no indication of such as of yet.

Soooo...here we are, it sounds good, everyone wants it, but please do not let a rumor, that has not been oficially credited or discredited, begin affecting your logic! I've locked consumers at incredibly low interest rates this week, and a few of those people are "waiting" for the 4.5% rates.

Last week, when rates dropped significantly it was as a result of the Treasury announcing a program to buy mortgage backed securities(mbs). The result was a large increase in consumer confidence, and the announcement had results as intended.

As of writing this blog the treasury has still not released any verbiage on exactly how or when this program would be implemented, investors are still in the dark. We can learn then from these Treasury actions, that this market is so volatile that simply getting on the news and announcing a direction can cause large market movements in this economy.

If you are a consumer, and you are holding off on locking that rate because you want your 4.5%, you at least need to know it is not likely to happen. You are taking a risk, you are gambling. The program as it sits right now is for First Time Home Buyers.

If you are looking at a refinance, consult with your loan officer. See if you can put in a longer lock on your loan if you feel the rates will come down that low. Rates are incredible right now, and you could miss your opportunity. There are 19 reasons to refinance, now is the time!

Finally, I want to emphasize something Jeff Belonger has been emphasizing forever. Your mortgage is not about you rate, it is about your payment. If the $50 or $100 is going to make or break you you have more problems than your interest rate.



Don't miss your chance waiting for something that may never come. If rates do get to 4.5%, you'll be saving a whole 1% and may want to refi again! I'll leave you with this, before the story broke late last week, what did you think about your 5.5% opportunity?