As good as it gets . . .


A lot of people are waiting . . . waiting on things to go lower, waiting to see what President Elect Obama does, waiting on 4.5%. 

Why??  (I really don’t know, but let me give it a shot).

Some are waiting because it only makes sense for them to refinance if rates go down a little lower.  Others (a good number of others), are waiting because they are hoping for something better.  They have “heard” that things might get better or go lower — one radio station in Atlanta (and I don’t know it was run as news or as a misleading advertisement) ran something saying that mortgage rates were currently between 4% and 4.5%.  With normal and customary closing costs, this is just not true.  It is true if you want to pay 3.5 points to buy the rate down, I guess.

Certainly, the Feds stepping in to the mortgage-backed-securities market with billions of dollars has helped to push interest rates down slightly.  (Remember, mortgage rates always move in anticipation of things, and mortgage rates went down in December on the news that the Feds would begin purchasing mortgage-backed-securities.)  The Fed’s first real purchasing began last week — they bought $10.2 billion of Fannie Mae, Freddie Mac and Ginnie Mae backed securities and the increase in buying demand helped to keep prices (and mortgage rates low).  The Feds have said that they will purchase a total of $500 billion in mortgage-backed-securities between January and July of this year.   And this promise from the Feds, has some hoping that mortgage rates will push even lower than current levels.

What if the Fed’s actions only help to keep mortgage rates as low as they currently are — at 30 or 40 year historical lows?  What if mortgage rates can’t push much lower than 4.75%?  What if this is as good as it gets?


Today’s market is a great example.  More Fed dollars were injected in to the mortgage-backed securities market ($23 billion) . . . and mortgage rates have gotten worse.  Yes, mortgage rates have gone UP (not much, but up). 

As funny as it sounds, I have had more than one potential client “sigh” when I have quoted them 4.875% for a 30 year fixed-forever mortgage.  FOUR AND SEVEN EIGHTHS!  FIXED!  FOREVER!  Let me ask you this, if you have $200,000 available in cash, would you be willing to invest that money in a fixed CD, to lock the money up for as much as 30 years at a steady rate of 4.875%?  No way.  You would never do that — and that’s for the safe investment of a CD.  What about a mortgage debt?  Add the risk and costs associated with a mortgage, possible defaults, costs of servicing, losses in foreclosures, decreased property values, mortgage fraud, etc. and there just doesn’t seem to be a whole lot of room for things to go lower.

If you are waiting, I would encourage you to look at the numbers closely . . . if you are going to save money at 4.75% or 4.875%, how much more are you going to save at 4.625% or 4.5%?  Is it worth the risk of waiting? 

I would also encourage you to pick a target.  Find the number that works best for your specific siutation (based on your current rate, expected time in the house, etc) and be ready to take action if that rate is available.  In this market, one of the most important pieces of info is knowing when it’s time to take action.  Check out the recent posts below or on the previous pages (info on, promo code = the mortgage blog) to find out how you can get a target rate set — and be alerted when that target refinance rate is available.

Or, you can wait.  You can wait for 3.5% . . . did I hear someone say that  rates might go down to 3.5% in 2009 . . . I say, “sell crazy someplace else, we’re all stocked up here.”


Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit


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