2008 Mortgage Interest Rate Projection

Don't we all wish we had a crystal ball when it came to predicting interest rates????

If you take a look at a comparison of the 10 Year Bond Yield versus the average 30 year fixed interest rate, you will notice an interesting phenomenom. Historical, both are down in the last quarter of the year compared to the summer of the same year.

Continue to look into the first quarter of the next year. In all but two years in the last 10, rates continue to lower through the first quarter of the new year. In the two cases where they rose in the first quarter, they actually lowered throughout February.

This historical data alone, lead me to believe that interest rates will continue to drop througout the first quarter of the new year.

More importatntly in today's market is the volitialty in the current markets. As the Fed's prepare to meet December 11th, we're almost 100% certatin they will lower the fed's funds rate by another .25% if not .5%. Remember though, generally when the fed's lower the overnight rate, mortgage rates will tick higher.

I don't see that being the case right now. Lenders seem to be pricing in a .5% rate cut and it looks like the 30 year conforming rates will remain low, pushing themselves back into the mid to high 5% range at no points.

Don't forget to get up to the minute info every Sunday night at 6pm on KRLA AM-870 with Straight Talk Real Estate.

~ CHUCK