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Mortgage Rates Hit Historic Low

Posted by:  Chip Poli
2011-08-09 19:49:45

Just when you thought your mortgage rate couldn't get any lower.

If you have refinanced your mortgage lately you benefited immensely from the turmoil in the US Economy.

Yes, an unsteady, even collapsing economic environment will have a tendency to drive long term interest rates to very low levels. It is a side effect of tough economic times that you should be taking advantage of.

As investors seek safety while corporate bonds and stocks fall, they will undoubtedly flee the insanity and jump into US Treasury Bills. As demand for these securities increase the yield, or return on these low risk investments head south.

Needless to say, the last two years have been a great time to refinance your mortgage as 30 year fixed rate mortgages are directly tied to the yield on Treasury Bills.

The Unthinkable Drove Mortgage Rates Even Lower

On Friday, August 5th at 8pm something happened that shook financial markets to their core.

downgrade good for your mortgage rate

Standard & Poor's did something that experts never thought would happen, for the first time in history the Credit Rating of the US Government took a downgrade. S & P actually downgraded the Treasury's Credit Score to from AAA to AA+. This is kind of like your credit score moving from 850 to 795.

S & P said this decision was simple economics, the government takes in less than it spends with tax related revenues at approximately $3.4 trillion and expenses of approximately $3.7 trillion.

Warren Buffett disagrees, "I can go out drinking all night, but if I have a printing press at home, my debt's good." Buffett has a way of putting things so simply, it's actually a lot more complicated than this but...

What does it all mean?

For you it means incredibly low interest rates. This may sound slightly counter-intuitive, if the credit score drops, isn't the cost of US Debt actually going to go higher?

Well, yes, over time this is true but, not until inflation sets in and this will happen but it hasn't yet, back to you...

The point here is, that you have a window of opportunity before inflation shows up where you can take advantage of the lowest 30 year fixed mortgage rates in over 40 years.

You can game the market if you wish but, our advice would be to take action now!

Our 30 year fixed rate mortgages are underwritten in-house and you can rest assured you will receive the best available terms on your mortgage.

Give us a call 866-335-POLI or visit us online to find out how low your mortgage rate can go.

Poli Mortgage Group - Rates. Integrity. Service.



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