Based on a forecast of the Ten Year Treasury Bond Rate, there may be a corresponding rise in mortgage rates coming at a steady pace until the third quarter of 2011.

Forecasts from the Mortgage Bankers Association (mbaa.org) shows economic data from the present date and data forecasted through 2010.

One of the items listed in the report is the Ten Year Treasury Bond Rate, which has been commonly used as a barometer of mortgage interest rates.

Thirty year fixed mortgage rates tend to follow the ten year treasury rate, and current mortgage rates are usually set at 1.5 to 2% over the treasury note rate as compensation to lenders for the risk involved in mortgages.

Fannie Mae (fanniemae.com) also published an economic forecast showing a trend of rate increases from the current quarter through the end of 2010, with an estimate of nearing 6% at that time.

If these forecasts hold true, we may see thirty year fixed mortgage rates increase to more than 6% in next couple of years. Rising mortgage rates are a cause for concern, especially in a struggling housing market. Mortgage applications could slow as demand drops for home buying and refinancing. Higher rates can potentially reduce the number of qualified mortgage borrowers, which can put pressure on home prices, and affect current homeowners with adjustable rate mortgages.

Considering the sources of the forecasts, the information would appear to be credible, since Fannie Mae is a government chartered organization, and the Mortgage Bankers Association is a national organization that represents the real estate finance industry.

A writer once said “Predictions are difficult, especially about the future”, but in light of this information, those who have been sitting on the fence waiting for mortgage rates to come down may want to reconsider their strategy.

Refinance mortgage rates, mortgage rate quotes, and Carlsbad new homes

Thinking about refinancing? Here are 5 different ways to potentially save money by refinancing your home loan:

1. Save with a Payment Reduction
Instead of looking only at the mortgage rate, compare the savings between your existing payment and the refinance payment. Compare principle and interest payments on a loan amount that includes closing costs, but not taxes, insurance, or cash out, then decide if the savings is worth the effort to refinance.

2. Save by Consolidating Your Debt
Most credit cards charge high interest, which is compounded daily. If you have a substantial balance on credit cards, or other debt, you could save with an equity refinance. Consolidating debts with a low rate mortgage could reduce your payments, and convert debts into a tax deductible, simple interest loan.

3. Save with a Fixed Rate Payment
An adjustable mortgage can be fine while mortgage rates are low, but eventually rates go up, and payments too. Adjustable loans have a purpose, which is usually for short-term savings. If you plan to keep your home for a long period of time, refinancing to a fixed rate mortgage can provide long-term savings.

4. Save with a Short Mortgage Term
Reduce the interest paid over the life of your loan with a shorter term. Your payments may increase somewhat, but your overall savings can be large. For example, refinancing from a 30 year term to a 15 year term mortgage could save more than $120,000 in mortgage interest on a $200,000 loan.

5. Save by Eliminating Insurance
Provided you have enough equity, you can eliminate unnecessary insurance. If you have mortgage insurance, it is only for the benefit of your lender, and will continue to be collected in your monthly payment until you sell your home, or refinance at 80% loan to value, or less.

Information on FHA mortgage rates for mortgage refinancing, and also, new homes in Carlsbad CA