any idea what 2011 will bring us rate-wise?

That is a very good question! It is also diffficult to predict. In order to predict the direction of mortgage rates, you ned to look at the market for Mortgage Backed Securites (MBS) because the MBS market is where mortgage rates are derived. An MBS is a bond whose collateral is the the "pool" of mortgages used to create the security. Like all bonds, the price of the bond has an inverse relationship to its yeild. You can think of the yeild as the interest rate the consumer might pay on a mortgage loan. When the bond price goes up, the yeild will fall and mortgage rates will fall. When the price of the bond falls, the yeild will go higher and mortgage rates will increase. Now that you understand how mortgage rates are derived, we can look at what has transpired in this market. The Fed became an active purchaser of MBS as part of the emergency economic stimulus enacted in late 2008. The Fed's activity was successful in bringing mortgage raes down. When they exited the MBS market in March 2010, the fear was that their exit would result in higher rates since the demand for the securites they were creating was going to disappear. For a short period of time rates did go up. Then came the mess in Europe and the fear that came along with it. Money exited the stock market and was parked in the safe haven of bonds. MBS and mortgage rates were the beneficiary of this "fear trade". This sent rates down to record lows that we enjoyed for about six months. Then came November 3, 2010, the day the Fed annouced another stimulus package referred to as QE2. This stimulus involved the Fed buying $600 Billion in US Treasury Bonds in an effort to keep long term interest rates low. However, the markets saw this action as inflationary. Inflation is bad for bonds because it erodes the value of the bonds. This perceived inflation risk led to a sharp sell off in the Treasury and MBS markets and in turn to a spike in mortgage rates. The Treasury and MBS markets have stabilized somewhat over the last week or two and have modestly recovered. However, we are nowhere near the levels we were at two months ago. Now to your question about the direction of rates: If you believe all the "experts", the Fed's action IS infaltionary in nature. According to them, this perceived inflation, along with some recent economic reports that have been better than expected will lead to higher rates. However, the Fed has stated that they are NOT concerned about the inflationary risks their policy/action may cause because they feel they can remove any accomidation they have provided to the markets fairly quickly. My opinion is that the Fed will continue to do whatever is necessary to keep rates low until the housing markets show signs of recovery. However, up until now my theory has been wrong and only time will tell which way rates ultimately go. Having said everything I have said, rates are still near historic lows and I dont think it will hurt anyone to lock in at these levels if they havent done so already. If you want to discuss your specific scenario and would like an FREE consultation, please feel free to give me a call at 877-662-3321 x-102. Joe Shamie.

It is tough to say with certainty what interest rates will do in the future. We are truly in a global financial situation where an event may take place here or another country and effect the interest rates in the USA. This is why I recommend a bias toward locking. If you like the interest rate today and the proposed principal and interest payment, it makes sense to lock in with either your purchase or refinance. Waiting for a dream rate may leave you frustrated and stressed and maybe rates will never get down to your perfect level. You could lose the chance of substancially lowering your monthly house payment. Lock now and smile.Ken Baltes

We have seen historic lows within 2010, that being said 2011 has started still in the high 4's and low 5's. Even though the economy is strenthening the rates will rise probaly a point this year. If you are thinking about purchasing or refinancing it is important to know what the rate is at the time of your application. If you have a high tolereance for fluctuation then float your rate, if not lock for 45/60 days if you have to.