Monday, February 09, 2009

What the Rates Indicate

We're refinancing the house. Interest rates dropped low enough that it was clearly advantageous to us to pay the costs of refinancing so that we could lower the monthly mortgage payments. (Quick, quick, before the rates go up. Because they're gonna go up.) Our mistake last year was that we didn't know something that "everybody" knows -- that you can lock-in the rates when they get to a number you like.

What's weird this year is that the rates for shorter-term mortgages are higher than for the 30-yr mortgages. That's not the way it was last year. And it's not even reasonable. The banks like to give better rates to the people who will have the money for a shorter time. But we keep finding the 15-yr rates to be the same as the 30-yr rates, or even slightly higher. The 20-yr rates are higher yet.

Seems to me that there is trepidation out there about what interest rates and inflation are going to be doing in the next years, but that the banks expect (or hope?) things will even out in the long term.

And still, Congress is promising us a "bail out package" that will "bail out" the representatives from those who accuse them of not bringing home enough pork, while leaving the taxpayers holding the bag full of IOUs. I'm wondering if maybe it's a good sign that the banks are at least expecting that the economic times will actually begin recovering in 20 years. I guess I'm not even that optimistic.


  1. What rate are you getting? We got 5.5/30 years when we got the house 6 years ago. We're thinking about refinancing to a 15 year if we can find 4.5% with no extra fees. The way I figure it, we'd better get debt free asap.

  2. The rates now have dropped down to what they were last January when we were starting to house-hunt, but they went up quite a bit a few weeks later when we were getting ready to close.