Refinance rates ride the roller coaster

Mortgage rates have been on a roller coaster ride over the past month as refinance loan rates have moved higher and lower sending anxious consumers for a wild ride. The last thirty days has marked a significant move with the stock market which has traded in a range of over 700 points, while the yield on the ten year bond has traded between 3.3% on the low end and 4% on the high end. to 3.3% during the same period. Mortgage refinance rates have hit the high mark of six percent and dropped down to a low of 5% over the last thirty days.

Consumers who are in the market for a mortgage loan are stuck in a position of uncertainty as to whether to lock into the market or take a chance that rates could move lower. The rapid jump with interest rates can be directly attributed to the rise with the stock market, following a bottoming out in March. As the stock market approached the 9000 point level, investors began to pull out of the bond market and sending yields (rates) significantly higher. During this same period, bond investors also began to become increasingly nervous about the large level of the U.S. deficit and whether the international buyers would continue to purchase Treasury bonds. This concern was a key factor in sending the yield on the ten year Treasury bond above 4% for the first time in the past six months and driving long term fixed rate mortgage loans above six percent.

The last thirty days have seen fixed rate mortgage loans gradually begin a pullback with rates. The stock market sell off has been a large factor with helping to drive investors back into the bond market, driving the yields on bonds lower. The market sell off can be directly linked with investors who grew concerned that the U.S. economic recession would likely last well into 2010 as reports such as the June labor market report showed considerable weakness within the economy. Investors who were looking for safer investments and less risk have moved back into bonds and this help drop the yield on the ten year bond back under 3.4%.

July has brought more movement to the market, the stock market has begun to rally off of the thirty day lows, moving above 8500 points, a sharp move upward. The large upward movement with stocks has coincided with the yield on bonds moving above 3.5%. Fixed rate mortgage loans for thirty year loan terms are now in the mid five percent range. The trading range for interest rates appears to be firmly between 5.5 to 6% without a firm movement in the market above 9000 points or below 8000 points. Freddie Mac, one of the nations largest loan services provides a free weekly mortgage review which can be found here. Homeowners who are in the market to refinance their home should consider working with a mortgage lender that offers the ability to lock in their rate, but also relock into a lower interest rate if the market improves. The ability to relock the rate, is often referred to as a float down refinance option.