Time to Refinance Your Mortgage?

While have risen a bit since the COVID craziness has subsided, interest rates on bonds and mortgages remain low. This is not good news if you rely on the interest income from your savings but it’s great news if you’re a net borrower — e.g., you have a home mortgage.

The rate on 10-year US Treasury bonds is now ~1.6%. We’ve come a long way from 1981 when 10-year rates topped out at 16% and mortgage rates neared 20%. Readers of a certain age will remember the runaway inflation fears during the Ford, Carter and Reagan years. Readers of a younger age have no fear of inflation. Times have changed.

If you have a home mortgage and have not refinanced it in the last year or two, consider doing so now. Assuming your income, credit score, and equity in your home are sufficient, you may find a lower rate and this could amount to a significant savings on your monthly payment. Alternatively, you may want to opt for a shorter-term instead of a smaller monthly payment and pay it off sooner.

For those of you with credit card and other unsecured consumer debts, those rates are notoriously slow to adjust downward with other interest rates. Don’t look for big reductions here but instead, focus on paying off those debts as quickly as you can.

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