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4.2% Mortgage Rates on the Horizon Says Study

According to CNBC, economists Bank of America-Merrill Lynch is anticipating 30-year mortgage rates could fall to nearly 4 percent by the end of the 2009. Apparently, they derived this assumption from various models they employ in house coupled with anticipated unemployment data and housing recovery estimates.

Refinance Now or Wait?

This really begs the question as to whether you should Refi Now and get a great rate or wait it out so you're not left with "mortgage envy" when your neighbor has a 4.2% rate and you have 4.625%. Personally, I'm of the camp that rates are so low now that if you have the resources, the credit and the spread from your current rate to justify it, do it now. If you do lock and rates continue to drop, it begs the question as to whether you should break your lock, which is covered here. If you are looking to refi, make sure you consider the Net Present Value of various mortgage options

I also started by getting several quotes on line and using this Mortgage Calculator to at least establish a baseline from various lenders. I'd also started a reader-generated forum of their rate deals for an independent source.

Regarding this prediction by BofA/Merrill, be mindful that these are among the same outfits that engaged in mortgage backed securities deals where the underlying models assumed housing prices would continue to climb at above-inflation annual rates for eternity so homeowners would always be able to pay, which was obviously unrealistic.

Related:

Toll 3.99% Mortgages - What’s the Catch?

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4.2% Mortgage Rates on the Horizon Says Study