Your Chance to Refinance
Thanks in part to three successive rate cuts by the Federal Reserve—and another almost surely on the way later this month—interest rates on 30-year fixed mortgages have fallen below 6 percent in many parts of the country, according to Freddie Mac, the lowest in two years.
But with inflation at the high end of the Fed's comfort zone, "I doubt you'll see long-term rates fall any further," says Standard & Poor's chief economist David Wyss, who expects rates for a 30-year fixed mortgage to end the year at about 6.25 percent. Even worse, falling home prices and tightened lending standards will make refinancing tougher.
The takeaway: If you're thinking about refinancing, "do it now," says Wyss, before home prices—and your equity—fall even more. If you're in the market to buy, however, it may be best to bide your time, particularly in swooning markets like Florida and California, where house prices are likely to fall by more than mortgage rates are likely to rise. But if you're in an area with stable home prices and good job growth, like Seattle, "I wouldn't bother waiting," Wyss says.
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