Last week I read an article about how some expert thought that rates would remain as low as they are now and maybe even dip further as the economy continues to struggle. Today I read another article predicting that rates will move up throughout the remainder of the year as the economy continues to improve. So what’s the deal? Where are rates going, what does it really matter and who really knows what they’re talking about, anyway?

No one knows where rates are headed. Yeah, you can run some models and make some predictions but if you’ll note the two experts I cited pretty much had all the bases covered. The first professor hedged two out of three by predicting rates would be the same or they’ll be different. Stuck his neck out on that one, didn’t he? The other prognosticator only made one bet, that of rates moving up. As most seers do, exactly “when” is not pinpointed. But sometime this year. In other words, we could wait until the last week of December 2003 and if rates are higher that week than before then that could be considered a correct forecast and the back-patting would begin.

What’s goofy is that both predictions were derived, presumably, from the same data. But again, who cares? What’s important is not what someone else thinks about the future, what’s important is how the current market affects your decision to take today’s interest rates in your individual situation. You really don’t care if rates go up in the future if you already locked in the lowest rate on the planet, right? It’s the other guy who waited and waited because he read one prediction (but apparently the wrong one) and rates spiked up on him so fast he couldn’t walk straight.

If you’re one of those who are considering locking in a fixed rate now for a purchase or refinance, or are waiting to buy sometime in the next month or so, it doesn’t matter where rates will be next October does it? It does, however, matter to you now. After all, if the “experts” can generally agree upon nothing, then how can you expect to be any better than they are? Instead of trying to be right later on, try being right. Right now.

Here is something to consider if you’re wathcing mortgage rates: If rates go down any further over the next few weeks, more than likely all you’ll get is another 1/8% or so. If rates go up, they go up fast. So fast that by the time you realize what’s happening in the interest rate sector, your lender could have increased interest rates a couple or three times. People who set mortgage rates have their eyes glued to their computer monitors waiting for the slightest change in mortgage bond pricing. While you’re out having a burger or shooting a round of golf, rates can climb 1/4% before you can yell “fore!”

And if you’re one of those who think that if we’re not at the bottom then we can sure see it from here, it might just be the time to consider paying additional points to discount your rate. In past columns, I’ve always advised to keep closing costs, including points and origination fees to a minimum. But that’s when rates are higher and there’s room for them to fall. Not just 1/8 to 1/4 percent, but more like one or 2 percent. Or more.

HSH Associates has a neat website for historical rate data ( If you go back to 1990, you will see that 30-yr fixed mortgage rates steadily declined, give or take, from about 10.50% to about 6.87% in October 1998. For the next couple of years, rates moved up in the mid 8's, then began to move down again. Hitting a record low last November below 6%, and hit yet another low this month, at around 5.87%.

If you’re one who thinks that rates are about as low as they can get, then go ahead and run the numbers and see if paying points to get an even lower rate can benefit. Make sure the additional point(s) you pay will be offset in the lower monthly payments in a reasonable period of time. Two years is reasonable enough, or more if you intend to hold the mortgage for a while.

The bottom line is do what’s best for you in your situation right now. Don’t split hairs with rates this low. Even the “experts” aren’t experts. Go ahead, ask two of them.

Published: April 11, 2003

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.