COMMENTARY | If mortgage rates hit 2%, you can bet I will be refinancing my house or at least doing some calculations.
However, that is an awfully low percentage and it seems a bit farfetched. It is difficult to fathom mortgage rates that low, particularly for people who lived through the housing market of the 80's and 90's. A home loan for 2%? The government may be desperate to keep the economy moving forward, but I don't know if they are that desperate. I could be wrong, but I have to believe that mortgage rates have hit rock bottom. Otherwise, I may get ready to sign some paperwork.
The desire to own a home
It is interesting when you look at the ongoing desire to own a home. If you think about it, a mortgage can be an incredibly scary investment, particularly in an uncertain job market. No wonder rates have fallen. Who wants to take on that kind of responsibility when the economy continues to be sluggish? I was fortunate to buy at a time when jobs were perceived to be a little more plentiful. Since then, I have refinanced a couple of times. Would I buy today? That is hard to say. I am getting to the point where refinancing again doesn't seem like it will happen, but 2% could make it happen.
Worried about tax deductions
I will say that I am a little nervous about the potential of losing the mortgage interest deduction. Ultimately, I don't think that is going to transpire, but as a consumer and a homeowner, it would be a financial blow to lose that deduction. Those that own a home in a large urban area understand the value of that tax break. I have a feeling that the housing market would suffer a major fall if people were no longer about to deduct their mortgage interest.
Where will it end?
Again, I cannot predict the future. Perhaps we will see mortgages at 2% or lower. Banks may find themselves in such a fierce battle for business that they are forced to take minimal profits and rely on the dollars generated from closing costs and other fees. I could see the market dropping below 3%, but getting all the way down to 2% seems like a stretch. Still, stranger things have happened. The housing market may eventually get a boost because mortgage rates fall so far that consumers can't afford to pass up the deal.
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