Orange County mortgage interest rates are up for the first few weeks of 2010. 2010 will be an intersting year for interest rates. While 2009 saw historically low interest rates for much of the year, many experts predict interest rates could rise in 2010.
Will Interest Rates Increase in 2010?
The Federal Reserve announced an end to the Mortgage Backed Securities program. The program winds down at the end of March, although there has been some talk that the Fed may need to continue the program until there is more confidence in the US Mortgage Backed Securities Market by other countries, who have been badly burned by the the US real estate and mortgage fallout over the past few years. The overall trend should be for interest rates to increase, alhtough as has always been the case, there will be peaks and valleys throughout the year.
30 year fixed rates began the year right around 5%. Many analysts believe the 30 year fixed rate could climb to 6.5% during the year, with possibly the quickest increase coming after the Fed MBS buying program comes to an end, leading into summer. Interest rates would then stabilize as mortgage originations decrease. Refinances will slow, and even purchase business could slow as a result of the ending of the Tax Credit programs for home buyers going away. the First Time Home Buyer Tax Credit of $8,000, along with the $6,500 Move-Up Buyers Tax Credit, are set to expire at the end of June, although a purchase contract must be signed by April 30, 2010.
How Much has the Government’s MBS Purchase Program Affected Rates?
It is believed that the MBS Purchase program has kept rates approximately 1% lower than they would have been otherwise. This means Orange County mortgage interest rates would be closer to 6%, even today, if it wasn’t the the Program. On a $350,000 loan amount, the payment difference between 5% and 6% is $219 per month. Put another way, a $350,0o0 loan amount at 5% would yield a payment of $1,878. To achieve that same payment at a 6% rate, the mortgage would need to be $313,200, or $36,800 less. A rate of 6.5% would require a loan amount of a $297,000 in order to keep the payment the same. If interest rates do increase, this will obviously apply more downward pressure to home prices.
Of course, there is never a better time to research your personal situation than the present. Anyone considering a refinance should get information now. Orange County First Time Home Buyers need to act quickly if they are to have time to cash in on the $8,000 First Time Buyers Tax Credit. The first thing to do is contact a local Orange County Mortgage Loan Officer who can prepare loan scenarios based on a borrowers qualifications and goals.
Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact me for more information about an Orange County, CA home loan. 877-786-4243 x 7.
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* Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.
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