How long will refinance rates stay low?

Record low mortgage rates have been a great boost to home owners who have been able to refinance their mortgages and lock in long term fixed rate loans at historically low levels. The mortgage industry has seen a tremendous boost since early December as the Fed help orchestrate a record drop with mortgage rates. The burning question remains, how long will interest rates remain this low?

The reality is that todays economy is definitely in unchartered territory. Mortgage rates historically have always moved up or down with the stock market and corresponding economic news as investors have moved in and out of bonds and mortgage bonds, helping to raise and lower these rates. The current market will react to news (such as the dismal housing report this week) as well as corporate earnings, such as the news from Microsoft, Wells Fargo and Ford Motor company this week. The news tends to move the stock market and helps guide investors as they move large investment pools in and out of the stock market.

Todays market has one major difference from a traditional marketplace, the involvement of the Federal Reserve. The FOMC has made it very clear they are deteremined to help keep mortgage rates at very attractive levels. They moved in this direction in late December of 2008 and again in March of 2009. Their involvement will likely become more resilient as they continue to digest the challenges in the current economy to help restore the housing market. The March existing home sales report came in well below expectations, a signal that the low mortgage rates have helped to spur home owners to refinance, but have yet to make a significant impact on home sales. The housing market is one of the key areas that the Fed is focussed on in an effort to try to end the U.S. economic led recession. They will be very determined to leave no stones unturned as they work to try and jump start home buying, including working within the secondary market to help keep mortgage rates at very attractive levels. Home buyers should feel confident that the low mortgage rates that are available today, should be around through the end of the summer. These attractive interest rates, combined with a government tax credit and surplus of affordable housing could provide for one of the greatest home buying opportunities of all time. Home owners who are not in a position to move, should definitely look into refinancing their mortgage loan to lock into a low fixed rate, as  the window for refinancing could begin to narrow by the end of the year.