Customer Service 1 (888) 261-2693
Please enter Search keyword. Advanced Search

Mortgage Rates at 2.75%? Yes! I'm Refinancing RIGHT NOW

By Dr. Steve Sjuggerud
Tuesday, October 2, 2012

"Steve, I just refinanced a guy at 2.75% on a 15-year mortgage," a mortgage-broker friend told me over the weekend.
 
I knew we were at record-low mortgage rates... But 2.75%? Really?
 
Sign me up! (Seriously. I am refinancing as I write.)
 
This is free money... Literally... This is money you have to take.
 
You see, the government is manipulating the mortgage market – in your favor.
 
It won't last forever. Sure, rates can go lower... But I'm locking this in as I write.
 
I say it's "free money" because, over the last 25 years, inflation has averaged just under 3%. Meanwhile, my friend is refinancing mortgages for just under 3%. So adjusted for inflation, I consider this "free money."
 
This is crazy. At the very least, banks need to earn more than the rate of inflation to turn a profit. But the thing is, the banks aren't keeping these loans...
 
Specifically, the Federal Reserve is trying to stimulate the economy. (This is a key part of the Bernanke Asset Bubble I've been telling you about.)
 
The Fed decided its preferred way of stimulating the economy is buying mortgages – and therefore, pushing mortgage rates down to record lows. For the last few weeks, the government has spent $20 billion a week buying mortgages.
 
To me, the government buying mortgages is a bit ridiculous... But I will surely take advantage of it.
 
To give you an idea of just how low 2.75% is today, consider that four years ago, 15-year mortgage rates were over 6%. This ultra-low 2.75% rate isn't just reserved for people with perfect credit – it turns out the national average is 2.73%. (Here's the proof.)
 
So don't assume you won't qualify. You should find out...
 
My friend the mortgage broker told me the banks are not preventing you from getting a mortgage... Heck, the banks want to sell you a mortgage, because they can now easily turn around and sell it to the government.
 
My friend explained it... "It's not much different than it used to be, as far as requirements – the bank just needs to verify those requirements more than it did before."
 
The down payment requirements are still very low, too... "For a couple percent down, you can get an FHA loan," my friend told me. FHA stands for the Federal Housing Administration. It has programs that allow people who wouldn't otherwise qualify to buy a home with a super-low down payment.
 
"For 5% down, you can get a 'traditional' mortgage." (By a "traditional" mortgage, he means a mortgage, under $417,000, with mortgage insurance.)
 
"But what about people who are underwater on their loans?" I asked my friend.
 
"We can even lend to them," he told me, "as long as they have verifiable monthly income that reasonably exceeds their debt service."
 
Here's how I look at it... Borrowing money in U.S. dollars and investing it in a real asset is exactly where I want to be... In a sense, you're "shorting" the dollar and "going long" U.S. real estate.
 
Mortgage rates are at record-low levels. I'm personally not waiting around. As I write, I am in the middle of the refinancing process... locking in a rate below 3%.
 
At these artificially low rates – below the historical rate of inflation – you should consider a new mortgage if you can afford it... whether it's buying a new house or refinancing your existing one.
 
I'm doing it. I'm not waiting around. What are you waiting for?
 
Good investing,
 
Steve




Further Reading:

Steve recently called housing "the most awesome opportunity in American history." Between bottoming housing prices, record-low mortgage rates, and more money printing from the government, he's personally taking advantage of the deals in real estate.
 
Catch up on Steve's "cheap housing" argument here: 
 

Market Notes


A WARNING FOR BOND BUYERS

Investors who've piled into the bond market over the last year may soon be disappointed.
 
A month ago, my colleague Jeff Clark told readers it was "decision time for interest rates." The 10-year Treasury yield popped above resistance, signaling a possible trend change. For the last several weeks, rates have crept higher. And that's bad news for bond investors.
 
Treasury bonds have an "inverse" relationship with interest rates – when one goes up, the other goes down. And falling interest rates since 2008 have provided a massive boost to Treasury bonds. During that time, big bond funds like the iShares Barclays 20+ Year Treasury Bond Fund (TLT) are up 70%-plus. But TLT has just shifted into a downtrend...
 
As you can see in today's chart, since interest rates bottomed in late July, TLT has made a series of "lower highs" and "lower lows." The uptrend in Treasury bonds may be over...
 
– Larsen Kusick
 

premium teaser


In The Daily Crux



Recent Articles


  • Porter's Latest Prediction Just Came True
    By Justin Brill
    Saturday, February 17, 2018

    Last summer, Stansberry Research founder Porter Stansberry warned that a significant stock market correction was now certain for the first time in years. Surely, Porter is even more bearish now? Not exactly...

  • The One Secret to Thriving in 2018
    By Chris Mayer
    Friday, February 16, 2018

    We all have the same questions: What awaits us this year? What dangers lie ahead? What opportunities? What should we do next?

  • Why Inflation REALLY Matters to Investors
    By Dr. Steve Sjuggerud
    Thursday, February 15, 2018

    Was it a coincidence that inflation soared at the same time the stock market crashed? To find out, let's look a little further back in history...

  • Why the Crypto Correction Is a Good Thing
    By Tama Churchouse
    Wednesday, February 14, 2018

    In the world of crypto assets, a fire is raging right now...

  • 100% Chance of New Highs in the Next Six Months
    By Dr. Steve Sjuggerud
    Tuesday, February 13, 2018

    Over the past 90 years, 100% of the time, stocks have been higher after going through what they just went through...