Interest Rates

[David]

What is the prognosis for 30yr. fixed rates? I hear all kinds of mumbo jumbo about bonds etc. driving the rates up. However, the prime remains at it's lowest level in over 40 years. Did the banks just get "cold-feet" about making long term fixed rate loans at 6% or have they made all the loans they want to make until after the first of the year? Is there a good chance that the rates will drop again next year if the prime remains the same or perhaps drops another 1/4 to 1/2 point?
I just declined a loan that went from 6% to 6.75%. It made a difference of $80.00 per month in my payment.

[rmurray]

Long term rates have little to do with short term rates...Unfortunately the press follows the FED actions with large headlines...but does not pay much attention to long term...

Almost all long term rates are indexed to the 10 year Treasury bills...Think about it...large investors can loan money to the government with virtually 0 risk...Any other long term loan will be higher based on its perceived risk...Long term treasuries have increased by over 1.5% in the last few weeks...As a matter of fact...Thursday..after the FED meeting in which the fed held its very low rates...the treasury yields went up 1/8% in one day..

Now....NO ONE can tell you with any certainty what rates will do...If they could they would be in NY and be billionaires in a very short time...

Just remember..besides the last 6 months..6.75% was the lowest rates have been in 40 years....rates are still at the bottom of the cycle...Wait and you risk a much more traditional home mortgage rate of about 9%...

Shop around a little...some mortgage companies are still at 6.3875 to 6.5....but who knows how long that will last..