Californians: when will you refinance?

dd74 · 03-08-2004, 05:24 PM

Do you guys think now is a good time to refinance one's home loan, or to gamble and see if the rates decrease? What are your indicators that the rates will decrease or go up?

Thanks.

turbo6bar · 03-08-2004, 05:48 PM

I'm not an economist, and I haven't stayed at Holiday Inn Express. I've been told mortgage rates generally follow the 10 yr treasury bond. It's at 3.76% now, and that's the lowest I've seen in several months, if not longer. You can expect the treasury bond yield to go up if the stock market starts to heat up, and mortgage rates would climb.

Truth is no one can predict mortgage trends. Check web sites like bankrate.com, and the experts don't even agree.

You need to look at the rate on your existing mortgage to see if it's worthwhile. Cash out or refi balance? Prepared to start over at square one (360 or 180 payments)?
Jürgen

dd74 · 03-08-2004, 06:15 PM

Yep: bankrate.com is where I looked. The graph shows it going down...

motion · 03-08-2004, 07:23 PM

Just a hunch, but with the election coming up, the Administration might put downward pressure on rates... but even then, it won't be by much. If you already have a good loan, the fees, points and starting over will likely negate any monthly reduction in your mortgage, unless you plan on keeping your place for 15 or 30 years.

turbo6bar · 03-09-2004, 08:47 AM

Rate prediction

motion · 03-09-2004, 09:34 AM

Yep, that about sums it up, Jurgen!

turbo6bar · 03-09-2004, 09:41 AM

Doh, is that link coming through? When I click on it, it pulls up this thread, but when I copy it to a new browser, it brings up the Yahoo! poll about predicting interest rates.

http://polls.yahoo.com/public/archives/57019568/p-quote-315

dd74 · 03-09-2004, 09:49 AM

The link's not working, Jurgen.

In any event, the poll I read on Banknote.com last night states rates will flatten for a while, then start to creep up.

B D · 10:03 AM

Market Views: Probability of Fed rate change during any one meeting
FOMC Meeting Date 3/16 5/4 6/30 8/10
Chance of Fed Tightening 0 (bp) 98% 91% 71% 63%
Chance of Fed Tightening 25 (bp) 2% 9% 29% 37%
Chance of Fed Easing 25 (bp) 0% 0% 0% 0%

Now is the time!

turbo6bar · 03-09-2004, 10:36 AM

If you go to Yahoo! Finance you can see the poll on the bottom right. I do agree now is a good time to refi. Many thought Summer 2003 was the best anyone would ever see. Now, it's getting close, and with the economy still a little weak, I think you might have a small downside, but is it worth the risk? If you see 2 or 3 positive economic reports, rates WILL jump. Will you be able to lock in before they spike a few points? Worst case, get your paperwork in now, so you can lock in with a phone call.

Treasury bond is still well under 4%. Question is will it get closer to 3% (summer '03)

Here's the text from the non-working link above:
"The difficulty of forecasting future stock prices may be well
known. But forecasting interest rates may not be any easier.
The Wall Street Journal publishes a Semiannual Economic Forecasting Survey of approximately 50 economists, and has done so since at least 1982. In this survey, these economists are asked, twice each year, to predict the future yields six months away on a common benchmark for interest rates (for example, U.S. Treasuries) .

The results? A research firm tabulated that over the 1982-2002 period, the economists, on average, were wrong on each forecast by 84 basis points (0.84%). Put even more directly, the economists (as a group) usually failed to even correctly predict the direction of the change in interest rates over the next six months. In only 12 of 42 forecasts did they correctly figure that interest rates would go up when they in fact did go up subsequently, and down when in fact there was a decline."

Hugh R · 03-11-2004, 09:47 AM

If you refinance, always go with the same or less number of years to pay off. If you had 13 years left on your loan and start over refinancing with 15 you'll make 24 more payments which will easily eat up an offset from the savings from the lower interest rate.

motion · 03-11-2004, 09:58 AM

Hugh - That's good advise if you plan on keeping the property for the term of the loan. If your plans are short term, less than 3-4 years, a lower interest rate will be the best route.

turbo6bar · 03-11-2004, 02:09 PM

30 yr rates average 5.41%, which is within 0.2% of rates in Summer 2003, which were the lowest since 1972. 15 yr rates average 4.61%. 4.60% for Summer 2003.

Now is a very good time to think about refinancing. Rates might go even lower if the economy stays a little sour.

Porsche-O-Phile · Porsche-O-Phile's Garage

Nope. Can't afford a house in CA anyway. I'll probably be among the tens of thousands of middle-classers running away from CA in the near future. Housing is just too damn expensive.