Harp 2 Interest Rates May be Heading Lower Due to Hurricane Sandy

You are probably asking the same question I had when I heard this news. How can a hurricane affect interest rates? Well lets discuss what directly affect interest rates so we may determine what affect Sandy could have.

Bonds directly affect interest rates as we now are on the opposite side of the seesaw of the stock market. Usually when the stock market is up, money in bonds are taken out in order for investors to rake advantage of the rally. On the other hand when the stocks are dropping investors move money into the safe haven of bond market therefore having a direct short term impact on interest rates including the HARP government program.

Some believe that we have a better than expected job report and yet bonds remained resilient. Some of that is the federal government buying mortgage backed securities putting a floor on the bond prices and a lid on the ceiling to control the bond rate.

Because of the short trading week due to Sandy stocks behaved differently than anticipated as it was a poor trading week since the hurricane cut the week short. Combined with a better than expected job report(according to most analysts) and a poor performance of the stock market, I wont be surprised if we challenged the all time low interest rates we have seen in the past.

Since HARP 2 loans are taking longer than 60 days in most cases, this would be the perfect opportunity for those that are underwater on their home to anticipate a lower interest rate and position themselves when rates are expected to drop. Homeowners and investors with condos and single family alike, can lock in this lower rate and take advantage of the historically low payments. Both will be able to keep their home regardless of whether they are upside down with negative equity.

This is good news especially for Florida condo property owners since this state took the biggest hit in value during this historical drop in this country’s wealth. With rents at all time high, interest rates at all time lows it only make sense to refinance and stay in the home rather than pay a monthly payment to someone else. If you are “stuck” in your mortgage and want to remain a homeowner, then the HARP 2 refinance is what you are looking for. Not only do you keep your home, but you also take advantage of the tax deduction for the interest rates.

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