“Risk Without Return”
Just two weeks after I last noted plunging interest rates (see, “Refinance Redux, or, “Thanks, Greece!”) . . . they’ve dropped even further.
This time, the catalyst is Spain (can you spell C-O-N-T-A-G-I-O-N?)
While home Buyers may not follow gyrations in world debt markets, if you’re looking for a home — or have a mortgage on one you already own — you should take note: the 10 year U.S. bond is a popular peg for fixed interest rates (“LIBOR,” or the London Interbank Offer Rate, is the analogous one for variable rate mortgages).
The bottom line: if you’re tired of getting whacked as a saver, switch sides and take advantage of record-low rates to reduce your expenses.
Just don’t get so overextended that you can’t handle the payments.
P.S.: One more piece of advice: inquire about a re-lock option from your lender.
When rates are as volatile as they are now, a second “bite at the (interest rate) apple” can be worth the fee (typically, a fraction of a point of the loan amount).