Mortgage Rate History – Is Now the Best Time in History to Refinance?
Yesterday I wrote an article on historical mortgage rates that illustrated the fact that mortgage rate data has only been collected since 1971. Although that seems like a long time, in financial markets four decades is not very long. In the last four decades the United States stock market has only seen three long term trends changes: bear market from 1965 to 1982, bull market from 1982 to 2000, bear market from 2000 to the present. Three direction chances in over 40 years? This helps to paint the picture of why four decades of data is not sufficient to make any conclusive analysis.
There other issue at hand with the limited amount of data is that we do not have data from a recession this deep. We would have to go back to the 1930’s to find data the would be comparable to today’s economic environment. That being said, we cannot make conclusions about that period because the mortgage industry was MUCH different during the depression. In essence, it is truly impossible to make predictions on the future of mortgage rates because we do not have a sufficient amount of data.
When looking at the short history of mortgage rates as shown by Freddie Mac’s PMMS we can see that we are in unprecedented times. Never have mortgage rates been this low since data began in 1971. This is all relative as the unemployment rate continues to climb. If Americans are struggling to make any money, it doesn’t really matter how low mortgage rates are. The one good thing about the current mortgage industry is that those who have been financially smart will get rewarded with extremely low rates.
If you have been smart with your money and saved for a “rainy day” you will have a chance to refinance at the lowest rates in modern history. Make sure to take advantage of this by locking in at rates possibly under 5%.