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Lorraine Said:

Fixed rate mortgage and interest rates going low?

We Answered:

If your mortgage is fixed rate, then that is the rate you'll be paying on it, regardless of what is happening to interest rates in general.

For example, say when you took the mortgage out they said "we'll charge you 5% interest fixed for 5 years" then even if mortgage rates go to 1% or 20%, you'll still be charged 5% for the next 5 years. It's a "gamble" that you entered into. If mortgage rates went up to 20%, you win, because you still pay 5%. If they went down to 1%, then you lose because you're still paying them 5%.

Paying at your fixed rate will not pay your mortgage off any earlier, you won't get a rebate because interest rates have gone down, you will still be on your "fixed" interest rate.

Depending on how much you owe, how much the interest rate is that you are paying at the moment, how long you have left to run till the end of the 5 years and how much of a penalty you will incur for terminating your agreement, it may be worth looking to change your mortgage to either a variable one or (if you prefer the security) a new, lower, fixed rate mortgage. Only in that way, by using the extra money that you would have been paying, you may be able to pay off your mortgage earlier.

Shawn Said:

How come mortgage interest rates are not dropping in par with the 10 year bond?

We Answered:

Its called supply and demand. If you are a loan purchaser in todays market.. You call the shots. Fannie/ Freddy have cap limits and cannot exceed them. You go to the secondary market (most are gone) and if you find ANYONE you pay what they ask. Im surprised that rates havent gone up. And if you want to see TRUE madness look at Countrywides 90% jumbos. You want YSP? Rates REALLY close to 10%. Can you say bend over and grab your ankles/

Virgil Said:

How long will mortgage interest rates continue to drop?

We Answered:

They've stabilized for now. Might drop a tiny bit more if the fed keeps rates the same at the next meeting. I'd lock now, because if the fed raises them again, the rates are going up.

Of course, any rate that's not locked isn't real. Period.