Wells Fargo & Co’s (NYSE: WFC) refinance rates have been historically low for almost all of 2009. Subjecting the summer months, Wells Fargo’s mortgage rates have been under 5% during all of 2009 to date. During the summer, there was an positive trend in the 10 year treasury rate which has lead to an increase in mortgage rates over the summer, but recently the 10 year treasury yield and mortgage rates have dropped back to near all time lows.
Is the month of November the time to refinance or will rates drop even lower to new record lows early next year? One of the primary reasons that mortgage rates are as low as they are is the Federal Reserve Bank’s purchases of mortgage backed securities and US Treasuries. The Fed will end purchasing US treasuries in October, so mortgage rates might have a short-term increase, but purchases of mortgage backed securities will continue.
Analysts predict that as long as the Federal Reserve continues to purchases mortgage backed securities, Americans are not going to see a dramatic increase in interest rates. Some have predicted that there will be a rally in treasury yields now that the Federal Reserve is done purchasing treasury yields, which will drive mortgage rates higher, but not dramatically so.
November might not be a critical month to refinance, but if you’re going to refinance, you’re going to want to do it before March of 2010 when the Fed ends its program of purchasing mortgage backed securities. It’s possible that November and December will have the lowest interest rates that consumers can get in the near future.
Many lenders, including Wells Fargo, are offering record low interest rates, so register before March comes around, otherwise you might be paying between 5% and 6% instead of getting a rate in the 4’s.