US mortgage rate falls to record low

Quite a bit has happened in the past few weeks. The Federal Reserve took the unconventional step of buying treasuries in a bid to lower interest rates. It seems to have worked, as mortgage rates in the US to fell to a record low. Analysts expect Bernanke to continue buying treasuries and keep rates low. Nevertheless, there is always the possibility of the treasury bubble bursting. Bernanke himself came forth with a statement on the need to unwind the quantitative easing measures applied currently and combat inflation once the financial crisis is over.

SOR continued climbing this week, touching 1.37% on 31 March before receding back to 1.18% on 3 April. It is likely to come down in accordance with generally lower rates in the US. Sibor (3 months) on the other hand continues to hold steady at 0.69%. This proves to be a boon for mortgagees who have taken on the Sibor-pegged home loan. One bank even offers home loan pegged to the 1-month Sibor which is currently at 0.44%. With the 0.8% margin that the bank charges on top of the Sibor, the overall interest rate is only 1.24%. Sounds like a pretty good deal indeed. The deciding factor i will have to weigh before doing a refinancing is whether overall, taking into consideration the difference in interest rate and the legal fees incurred for the new loan, i will reap much more savings over my current loan. Based on the current SOR (3 months) and Sibor (1 month or even 3 months), the answer is a resounding YES. Looks like I should decide on this matter soon.

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