On January 22, 2008, mortgage rates fell quickly and without warning. They touched levels not seen in 5 years and then stayed there for a period of 28 hours.
On that day I called many of my past clients and of course many others.
The call went something like this:
Me: "Mortgage rates plunged. You should consider a refinance to lower rates."
Homeowner: "Hey, thanks for calling me! What are rates?"
Me: "The 30-year fixed is priced at 5.125% with no points. It hasn't been this low in 5 years."
Homeowner: "Awesome! Let me think about it -- I'll call you tomorrow with the go-ahead."
When "tomorrow" came, though, the 5.125% wasn't available anymore. 5.125% had become 5.500%. Markets had already reversed. And then some.
When those 28 hours were over, the 30-year fixed mortgage had already started a journey that would bring it from 5.125% to 6.375% in less than a month.
This happened because the Fed Funds Rate had just been lowered farther and faster than at any time in history and because the economic stimulus package had just passed.
The combined impact of these economic jumpstarts made markets fearful of long-term inflation and inflation is the enemy of long-term mortgage rates.
That said, there's been a ton of recession talk lately and that is proving to be a positive for the short end of the mortgage rate curve. The recession fears translate into lower mortgage rates on shorter-term mortgage products like ARMs.
Consider this your advance notice, folks. Make like a boy scout and get prepared for a dip should it ever come.
This time, when I call, be ready for it.
This time, when your target interest rate hits, be ready to grab it.
This time, have a remortgage plan in place and be ready to execute it.
The best way to be prepared is to talk with me in advance. Have the talk today, if you have time.
Let's talk about that certain mortgage rate that you are looking for and if it comes available we can lock it in.
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