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What Fed’s bond buy means for mortgage rates
by w1ld at 11:46 pm EST, Nov 13, 2010

Mortgage rates fell ahead of the Federal Reserve’s announcement last week that it would start buying $600 billion in government bonds to stimulate the economy over the coming months. But could mortgage rates go even lower, now that more is known about the scope of the Fed’s plan?

With the possibility of lower rates, it may be tempting for people who can refinance to hold off and wait for mortgage rates to drop some more.

But be careful: Betting on the direction of rates right now is difficult, and it might not make sense to hold out for another drop, gambling that mortgage-market prognosticators will be dead-on with their projections, Springer said.

And if you have a lot to gain from a refinance now, it could be in your best interest to make a move — even if rates do end up dropping after your loan originates. If home prices slide more, for example, a borrower who could refinance today might have a tougher time in the future if he doesn’t have enough equity to make the deal work.

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