I’ve started to think seriously about refinancing my own loan again. In the past, I’ll admit, I was a “serial refinancer”—for a stretch of four-plus years I was refinancing anytime the rates dropped, picking up an extra 0.25%-0.50%. I finally kicked the habit last year when I stopped choosing 30-year fixed mortgages and switched to a 15-year fixed.
If you’ve been reading my emails for the past year, you know my zeal for shortening the term of your loan. As home prices continue to be assaulted by an uncertain market, taking steps to increase your equity by shortening your loan term makes a lot of sense. Now is a great time to do that, as rates in the shorter-term products are at new lows (vs. 30-years, see below).
Many people use the movement in the 10-year Treasury bond as a gauge for measuring the movement of mortgage rates. While this is frequently a useful tool, we are experiencing an exception to this rule that may presage higher mortgage rates. Even as Treasuries have rallied to all-time highs (recall that as prices go up, rates go down) in the wake of a changing political landscape in the Eurozone, mortgage-backed securities and mortgage rates have stalled. This is not my prediction that mortgage rates are headed higher; rather, I’m observing that we are at a low that the market may not sustain, and the risk of waiting for lower rates is higher than the risk of missing them. If you have been trying to pick just the right time to refinance, and can benefit from today’s low rates in any product—10-year, 15-year, 30-year, or ARM—please give me a call.