WOW... 30 FRM at 4.9% PAR
I do believe we have officially 'touched'... if not penetrated... the 2003 lows for fixed rate mortgages.
As bond yields continue to be truncheoned to death, I believe we'll see rates drop a bit further.
We are in the range of the "point of diminishing returns"... which is to say, if you are in a loan situation where you see staying put long enough for a break even within 3-5 years on a refi... then dilly-dallying around to "see if it goes lower" is simply playing with fire.
MY MARKET OPINION (for whatever it is worth... but which (if I may say so myself, has been scarily accurate over the last several years,)) is as follows;
Fed Prime will likely be artificially constrained (kept lowww) for at minimum through 2009, and could reasonably remain constrained through 2012 (all depending on how long the government fears civil economic rebellion ;~)
Conforming FRMs (the stuff now not only explicitly backed by the "givernment", but packaged & sold into securities/bonds that the feds have decided to directly buy, with no future limit nor exit strategy,) will roll around in the 4% range for as long as it takes for the natural real estate cycle to absorb its past 'exuberances' and return to its average growth rate of real inflation* plus 1-2%
(* Real inflation is the massive tidal wave forming while the present white-water is appearing to currently be receding (deflation.) We're likely to see this "surprise" inflationary tidal wave begin to hit in anywhere from 6-18 months, and it is going to be a doozy... and its going to sweep away economic roots making the last 6-12 months look like a birthday party.)
Nobody is exactly sure how ugly the real inflation metrics will register, nor how soon.... but double-digits is mostly unargued... the question is whether it will be contained to the teens.
SO... "real inflation" being in the teens (at our prayerful best,) plus 1-2% to reflect approximate population growth along with relative quality preference to other nations (this is a hope, anyway,) would mean that the 30 FRMs are predictably going to stay between 4-6% until real estate rebounds to double-digit annual growth... and then (Paul Volker *IS* on the new administration's economic adviser team) we may very well see a "whiplash" at the Fed Prime... driving short-term rates on a death march to try to "soak up" the inflationary tidal wave set in place.
It will all be futile, of course.. just like the last time it was tried... but that never stops the tinkerers that think something "has to be fixed" even when history shows you can't fight mother nature.
PS.... if I haven't mentioned it recently... ESPECIALLY in light of realistic expectations... the ULTIMATE wealth development hedge is;
A) Acquire as much distressed income/yield real estate (directly,) as possible,
B) Use as MUCH current-dollar leverage as can safely be supported from yield. (Strategically "dancing" your funds around between primary-residence 30 FRMs in the 4%s, and HELOCs in the 3%s... is a quite worthy dance!!!)
C) Allow to simmer in the economic slow-boil... real estate values ROCKING up with the ludicrous inflation, while borrowed-dollar values are decimated in value at the same time.
D) Discover, in a decade, that your 'real estate fleet' has 5-bagged, your yield has 3-4-bagged, your equity has 1,000-bagged, and your leverage costs have been decimated by silly government "fix it quick" shenanigans.
Not EXACTLY a "no brainer".... but considering the so-called 'minds' working feverishly in government to make it all come true, its about as close as it gets ;~)
FINAL PPS. a bit of a gratitude post I sent up at a different quiet board on Sunday... worthy of a repeat, I think. Bless ALL of you for your support!!!
WOW... 30 FRM at 4.9% PAR