Mortgage Rates for Refinancing

What is a reasonable mortgage rate to refinance your home? Unfortunately, this is not a straightforward question, because the answer will depend on a number of things, not least of which is your current credit rating. Those with poor credit ratings will pay the highest rates. These are the people most in need of refinancing, and the current systematic rape of the western world’s wealth by the government banking conglomerates will continue as the banks are once again free to ignore the base interest rates and charge whatever they please.

Perhaps not quite as usurious as the credit card company charges, where the card companies are free to charge as much as they like thanks to judicious bribes to local government officials. Nonetheless, the mortgage companies are now free to charge almost as they please. Expect to see massive increases in the already outrageous up-front “arrangement fees,” which involve a piece of paper and a telephone call. In the UK, these arrangement fees are already in the thousands of dollars bracket.

The amount of mortgages written in the UK, the USA, and Europe continues to decline, and despite interest rates being at record lows, the mortgage rates continue to climb as the approval rate declines. Some one has to pay for the government and banks high salaries and bailout monies. Guess who is elected? You and me. I fully expect base interest rates in the 12-15% bracket within the next 18 months, and refinancing a mortgage to become all but impossible unless you have substantial equity in the property. 

If you are in the position of needing to refinance a mortgage, my advice is to attempt to renegotiate with the current lender and insist they either reduce the outstanding principal loan or bring the interest rate down to a reasonable level. Do not accept the idea of extending the length of the mortgage and refuse to pay an “arrangement fee.” These arrangement fees are going to destroy everyone except the banks. They will be taken out and paid in the form of “bonuses,” to the bank’s upper management and shown as “profit,” in the next set of accounts the bank produces.

The sorry state of the economy is not going to improve any time soon and as I watch the financial disaster continue to unfold, I am keenly aware that this is a global issue.

The German government Inc has poured untold billions into their banking system and the money has disappeared. 100 billion euros went into Hypo Real Estate; just last week, 50 million euros went into another failed mail order company, “Quelle,” and still the system is collapsing and the economy shrinking. The chances of refinancing with poor credit are shrinking along with the economy - all over the world. Porsche has already gone bust and is looking at 50 billion euro loss end-July 2009. Most likely this will also bring down VolksWagen. General Motors and Chrysler have already folded, and car companies around the globe are collapsing. Despite record low interest rates, the refinance mortgage rates are climbing ever higher - expect interest rates of 15%+ next year. If you are looking to remortgage with adverse credit - forget about it for the foreseeable future.

The British government Inc has just announced it will be taking 1.5 billion from health, education and transport spending to build 30,000 more homes despite the fact that there is upwards of 200,000 government owned house in a state of disrepair and the cost of UK homeowner loans is ridiculous at the moment. The same edition of The Times that published this story carries the headlines, “House market stabilizes with 0.9% prices rise," and “UK economy shrinks at fastest rate for 50 years.” It doesn't take a genius to work out that these cannot both be true one the same day - and I know which one is correct. Great Britain Inc is collapsing under a mountain of debt, the 100% home equity loan has gone the way of the dinosaurs, and the people in charge continue to try and bluff their way out of it – just to ensure a large pension payoff. What happened to public servants?

The same story is unfolding in the United States and other European countries. So – sorry to say – if you are hoping to find a reasonable mortgage rate to refinance, things are not looking well at the moment. If you are offered a fixed rate of anything around 6%, especially if you are looking to refinance with bad credit  - snatch their hands off - this rate will not be available for much longer.