MORTGAGE RATES DROP NEAR ALL TIME LOWS - TIME TO REFINANCE? 

 

Yields on US Treasuries fell again Thursday with continued fears over the spread of the coronavirus pushing interest rates down even further days after the Federal Reserve’s emergency 50 basis point interest rate cut.  The 10-year US Treasury Note dropped to an all-time low of 0.914% in intraday trading on Wednesday with the 30-year US Treasury bond yield touching 1.55%.  While the uncertainty in equity and fixed income markets surrounding the coronavirus remains, this continued drop in interest rates has brought mortgage rates down to historic lows, with the average 30-year fixed mortgage rate dropping to 3.29%, as seen in the graphic below. 
 
These low mortgage rates present a tremendous opportunity for homeowners to refinance their current debt and lower what may be their largest monthly expense.  For example, with a $300,000 30 year 4.5% fixed rate mortgage, the monthly payment would equal $1,520.  By refinancing to a new 30 year 3.5% fixed rate mortgage, the new monthly payment would drop to $1,347.  Over ten years, the total savings from this example would equal an estimated $20,760.  When looking at the graphic below, one can see how current mortgage rates compare historically to rates over the past 50 years.  While we cannot be sure where mortgage rates will go from here, we do think that now is an appropriate time to review whether it makes sense to refinance.
 
The Mather Group’s number one priority will always be to ensure our client’s financial plans are best positioned to achieve their long-term retirement and financial goals.  Even in times of increased market volatility and uncertainty, we will be monitoring markets for opportunities to help strengthen client’s financial positions and plans. 
 
If you would like to discuss refinancing in greater detail, please reach out to your Wealth Advisor, local bank, or mortgage provider.

 

The opinions expressed, and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. The opinions and advice expressed in this communication are based on The Mather Group's research and professional experience and are expressed as of the publishing date of this communication. The Mather Group makes no warranty or representation, express or implied, nor does The Mather Group accept any liability, with respect to the information and data set forth herein. The Mather Group specifically disclaims any duty to update any of the information and data contained in this communication. The information and data in this communication does not constitute legal, tax, accounting, investment, or other professional advice nor is it intended to provide comprehensive tax advice or financial planning with respect to every aspect of a client's financial situation. Past performance is not indicative of future results.

Sources: S&P Global, Capital Group, Boston Consulting Group, Harvard Business Review, Ned Davis Research

 

 

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