How low can interest rates go? (loans, foreclosure, mortgage rates, purchase)

[ZnGuy]

Mortgage rates keep drifting lower and with Fed rate near zero and indication that more money may be pumped into treasuries, how low could rates go? I plan to be in my current home another 4-5 years and considering 7/1 ARM which are now around 3.5%.

[lovesMountains]

Originally Posted by ZnGuy

Mortgage rates keep drifting lower and with Fed rate near zero and indication that more money may be pumped into treasuries, how low could rates go? I plan to be in my current home another 4-5 years and considering 7/1 ARM which are now around 3.5%.

Man, given the historical lows of 30 year fixed rates I cannot believe you'd risk an ARM

[Native_Son]

ask the Japanese!

Of course, once rates hit a certain level lenders have very little incentive to make loans...

and I agree with loves... why risk an ARM? you can get similarly awesome rates on a 15-year loan.

[ZnGuy]

Originally Posted by Native_Son

ask the Japanese!

Of course, once rates hit a certain level lenders have very little incentive to make loans...

and I agree with loves... why risk an ARM? you can get similarly awesome rates on a 15-year loan.

Actually you are probably right that it may be worth checking a 15 yr loan. To me it seems crazy to pay the higher rate on a 30yr if I know I will be downsizing in 5years, why pay the extra interest...

[GregW]

Interest rates could drop to just above zero but nobody would make loans if they cannot be paid due to unemployment.

[cohdane]

If a rate falls in a recession and no one is around to purchase, does it make a difference?

[CMPX2]

What concerns me is the amount of people "locked out" of the housing market due to short sales and foreclosures. How will this affect rates in the next 3-5 years?