Mortgage rates?

[cardinalfanusa]

Mortgage rates?I keep hearing that mortgage rates will probably hold steady until mid-2008. They've already increased from 6.15 to 6.75 in the past 6 weeks. I'm building a house, and won't be able to lock in a mortgage rate until probably mid-August. Should I "buy" my mortgage rate at 6.75% now for $750, or should I hold off? What are the odds that rates will top 7.25% within the next three months?

[ZenNode]

Well most likely the Fed will need to raise rates soon. They can not lower rates for China and others are threatening to pull out of the dollar if the dollar continues to loose value. Now the Fed might hold rates steady but given the current economic state of the US I think the market will dictate higher rates still.

[logic_150]

VERY good question. Anytime you make decisions with rates you are gambling just like you would on the stock market. Probably because the stock market is what drives most rates. Most lenders standard mortgage rates are driven by the 10 year bond on Wall Street, not the prime rates set by the Federal Reserve. Granted changes in prime rate do in time effect standard mortgage rates, they don't have immediate effect as they do with a home equity line of credit. In the last week the 10 year bond has jumped DRAMATICALLY which is why you have such a change in rates. All lenders are hiking their rates up, but there is no 100% foolproof way to determine how the market will move. In my opinion, when coming to your home, you don't want to gable. It may be worth the $750 simply for your piece of mind. The rates could topple 7.25%, but taking that chance is taking a gable. I can say that I doubt the rates will go down so much that your $750 spent would be at a loss. Even if the rates settle at .125% or .25% less than what you locked it at, you still win in the end because the difference in your payments is negligible. You might want to ask your lender if they have a float down option. This will allow you to lock your rate and have a clause that will give you the ability to lock at a lower rate should the market swing in your favor.

[October]

If you can lock at that rate right now for 750.00, my advise would be to do it. No one has a crystal ball, but rates show no signs of falling any time soon. As you stated previously, rates have risen by over .5% in the last couple months. Take the bird in the hand. It'll give you peace of mind.