Usually the law of unintended consequences goes the other way, but in this particular case, the terrible tragedy Japan is facing has resulting in an unexpected windfall to America. How? Mortgage rates plunged over the prior week through the following manner:
- Investor flight to safety out of stocks and into Treasuries
- 10 Year Treasury Yield drops
- Mortgage Rates follow the 10 Year Treasury Yield
- Huge week over week drop in rates; the 15 year mortgage is now below 4%, 30 Year at 4.76% – see table below
Many Americans gave up on refinancing after rates spiked following (ironically), the announcement of QE2. Well, we’ve seen the first major reversal now following the events in Japan. So, anyone that was already in the market for a home or missed the boat on refinancing is now looking at a lower interest rate, which means additional disposable cash in hand for the life of the loan.
Personally, I had been wondering “should I refinance my mortgage” into a 15-Year when rates were at 3.75%. However, since we were considering moving last year, we had to pass and wait to see what was going to happen with the home sale/purchase. Well, by this year as things fell through, we’d already missed out and it no longer made sense to refi. We’re currently in a 30 Year at 4.625%. However, if a 15 Year goes back to 3.75% again, I may well consider the move!
Rates Plummeting – See for Yourself!
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Good news for us. Our home is on the market and we will be buying a new one. Although, I would trade the lower rates for a better international situation.