Mortgage Rates are Likely at the Bottom

image by: jacobms

image by: jacobms

By buying back hundreds of billions in mortgage securities and treasury bonds, the Federal Reserve is doing everything it can to lower long-term interest rates. Consequently, mortgage rates on 30-year fixed-rate mortgages have recently averaged around 4.75% according to That is down from about 6% in mid-November.

The Fed began driving mortgage rates down last November when it announced plans to purchase a half trillion dollars of mortgage-backed securities within a year. That number has since expanded to $1.25 trillion dollars. The Fed is also buying back long-term Treasury bonds, whose pricing affects mortgage rates.

However, further declines are extremely unlikely because the mortgage-lending market has become less competitive lately, as hundreds of small banks and independent lenders have collapsed. As a result, less competition between lenders should reasonably lead to higher interest rates. Most market experts expect mortgage rates to hover between 4.75% and 5.5% for the rest of the year.

Many mortgage experts suggest now is the time to refinance. Until recently, 30-year fixed-rate mortgages hadn’t been below 5% since the 1950s. Thus, if you have been waiting to refinance your home, now may be the time as large banks that are beginning to dominate the market will be looking for ways to boost their profit margins.

Speak to your financial professional to discuss whether a refinance is appropriate for your situation. As always, it is best to speak with an advisor who won’t make a commission on your actions (a fee-only advisor) so can receive objective advice.

About the author

Lon Jefferies, CFP®, MBA

Lon Jefferies is an investment advisor representative with Net Worth Advisory Group, a fee-only financial planning firm in Salt Lake City, Utah. He is a Certified Financial Planner (CFP®) and a member of the National Association of Personal Financial Advisors (NAPFA). He possesses an MBA and bachelor's degrees in Finance and Marketing from the University of Utah. Lon writes articles for local magazines such as Utah CEO, Business Connect and Utah Business Magazine, and he consistently contributes articles to online magazines such as and (by The Wall Street Journal). Additionally, Lon is an expert author at Lon has been quoted nationally in publications such as the NY Times and Investment News.

Lon can be contacted at (801) 566-0740 or Learn more about Net Worth Advisory Group at and visit Lon's blog at

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