Finance Articles

Katz Mortgage Team Announces: Adjustable Rate Mortgage (ARM) Holders Look to Refinance to Lower 30-Year Fixed Rates As They Prepare for Increasing Sh

Atlanta, GA (PRWeb) December 7, 2006 -- Katz Mortgage Team, www.KatzMortgageTeam.net, of Amtrust Mortgage Corporation, has announced that Interest rates are on the rise and many home owners who have adjustable rate mortgages may see increases in their forthcoming annual adjustments.

As a further incentive for ARM holders to refinance to fixed rates, the US Treasury 10 year Note just dropped to 4.4% for the first time in a year. This translates to thirty-year fixed rate mortgages dropping from the high 6% range in July of this year down to the mid 5% range today.

Many on Wall Street feel that a slowing of the real estate market, coupled with higher energy costs have pushed rates down. They also caution that as unemployment stays around the 4.5% mark and the economy starts to heat up, inflation fears will once again push rates in the opposite direction.

Federal Reserve Chairman Alan Greenspan made it clear in 2004 that the Federal Reserve would be increasing short-term interest rates at a "measured pace." With the US Dollar at its weakest point in seven years, oil prices unstable and the evaluation of other economic indicators, the Fed Funds Rate was hiked seven times from 1.0% to 2.75% since June 2004 in an effort to curb inflation. Some economists believe it won't stop until the Fed Fund Rate hits 4.0%.

Consumers with revolving debt accounts tied to the prime rate have seen the effect through rising interest rate charges, as the prime rate always rides 3% above the current Fed Funds Rate.

Mortgage interest rates are affected indirectly by these changes. An increase in the Fed Funds Rate has an impact on financial markets as a whole, but mortgage rates may go up or down based on the perception investors have of current economic statistics and their reaction to the Federal Reserve's after-meeting statements.

Stephen Katz, of Katz Mortgage Team states, "Many of our clients took advantage of the super low ARM rates of 3 and 4 years ago and have saved a tremendous amount of money. But now we urge these homeowners to take a look once again at refinancing to a more stable fixed rate. If a family plans to stay in their current home for more than two years, or if they plan to keep it as a rental, now is the perfect time to switch horses and go back to a fixed rate."

In general, when economic data indicates we have a slow-down occurring in the economy, investors tend to sell off stocks and reallocate that money to the safe haven of bonds and mortgage-backed securities. The purchase of mortgage-backed securities drives interest rates down. When economic data says there is growth in the economy, the stock market typically rallies and mortgage-backed securities sell off to fuel that stock market rally. This drives mortgage interest rates up.

The current market reflects the reaction of investors reading between the lines on comments made by the Fed, and mortgage interest rates are going up. This will have an affect on home owners with adjustable rate mortgages (ARMs) tied to indexes that are based on short-term interest rates. This includes the 11th District Cost of Funds, 12-Month Treasury Average (MTA), London Inter Bank Offering Rates (LIBOR) and others.

Consumers who foresee paying an interest rate that is significantly higher may want to consider refinancing to take advantage of the stability of a fixed rate mortgage.

"Today there are at least a dozen ways to package up a fixed rate mortgage loan," Katz states. "Our advice is to spend some time discussing your entire financial situation with a trusted mortgage consultant. How long do you plan to stay in the house? What other debt do you have? Are you concerned about the payments? These are just a few of the questions that need to be asked to determine the best new loan."

This is also a good time for borrowers who started out in an adjustable rate loan due to a poor credit score to transition into a fixed rate loan if they can. Once a track record of making mortgage payments on time and in full has been established, this should have a positive effect on the credit score and there's a good chance the borrower may now qualify for a loan with a lower interest rate.

Katz reiterates, "We are in this tenuous window of opportunity with rates. If one has a 3 or 5 yr ARM, a low fixed rate may be the best Christmas present they get this year."


About Katz Mortgage Team
Katz Mortgage Team, backed by Amtrust Mortgage Corporation and headquartered in Atlanta, Georgia, is a high-performance team of top mortgage professionals with a commitment to providing the highest level of personal service to customers in 24 states across the nation. As a full-service residential mortgage lender, Katz Mortgage Team specializes in residential mortgages, mortgage refinancing, adjustable rate mortgages (ARMS), fixed rate mortgages, and a wide variety of Interest-Only loans attractive to real estate investors seeking investment properties.

About Amtrust Mortgage Corporation
A leader in mortgage banking, Amtrust Mortgage Corporation specializes in retail mortgage lending and is one of the largest independently owned mortgage companies in the nation. Constantly expanding coverage, Amtrust currently operates in the following states: Alaska, Alabama, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Maryland, Michigan, Mississippi, Missouri Minnesota, North Carolina, New Jersey, New Mexico, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Washington.

For more information, contact:
Stephen Katz - Senior Loan Officer
866 742-8400 (toll free)
www.KatzMortgageTeam.net

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