COLLEGE STATION (Real Estate Center) –




For those considering refinancing their homes, Real Estate Center Chief Economist
Dr. Mark Dotzour says there may not be a better time than the present for many years
to come. “Inflation is clearly rampant all over the world, including in the United States,”
he said. “When inflation is a problem, mortgage rates go up. Rates probably should be
much higher right now, but they aren't.” Why are rates so low when inflation is not a
fear but a fact? Dotzour says the fear of a global collapse of the banking system is
greater than the fear of inflation for the world's bond investors.

“Wall Street has a name for the phenomenon, and it's called the ‘flight to quality.’
When investors get concerned about global conditions, the United States is the haven
of safety,” Dotzour said. “As investors moved money into U.S. Treasury bonds, the
ten-year treasury rate dropped from 5.3 percent in August to 3.7 percent today.”
Dotzour said investors who are using U.S. treasuries as a safe haven are willing to
accept a 3.7 percent interest rate even though the U.S. inflation rate is at 4.1 percent.

Once the banking system is repaired and the fear of global collapse of the banks is
over, Dotzour predicts treasury rates and mortgage rates will move up, maybe
substantially.
“If you believe that we are in for a global financial collapse, then don't refinance yet
because interest rates will continue to fall,” he said. “If you think the U.S. government
and the central banks around the world won't let this happen, then now is the time to
get a fixed-rate mortgage at rates we haven't seen in the past 40 years.”
NO BETTER TIME THAN PRESENT FOR REFINANCING
2-8-2008
BWR Properties, LLC

Serving Dallas Area Homeowners Since 1992
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