How The Financial Crisis May Affect Your Mortgage
From Lehman Brothers’ bankruptcy to the AIG bailout and Merrill Lynch’s sale to Bank of America, the latest round of financial shockers has had Wall Street traders scrambling. But it also has consumers wondering if it’s a good time to buy a home or refinance, given the impact on mortgage rates. Here’s how experts weigh in on what all this turmoil means for homebuyers:
Rates will most likely go down as investors, trying to find a haven in a rough stock market, turn to “quality” vehicles such as Treasury securities. The prices on 10-year notes have already gone up — which means their yields have gone down — since the weekend’s announcements. Since 30-year mortgage rates tend to follow the yield of 10-year Treasury notes, those rates have also fallen, explains banking consultant Bert Ely. Bankrate.com reports an average 30-year fixed rate of 5.78%, down from last week’s 6.08%. In August, 30-year fixed rates hovered around 6.5%.
