June 2008: Is there ANY scenario in which home loan interest rates drop?

Quoted VA 5.875, buy down to 4.875 for 5.125 points, buy down to 4.5 would cost 8.75 (!!!!!). Don't REALLY want to plunk down most of our free cash for a break even 5 - 6 years out. Any reason to think rates could actually go down (besides the fact that everyone believes they are going way up, and the market seeks to maximize pain), and that we could re-fi at a lower rate a couple of years out? Has the fed lost control? How long do inflationary bouts last? I'm trying to see how we get out of this current crisis without eventual massive inflation to destroy debts and obligations, even with deflationary forces if the economy completely craters. I guess if we end up living in Zimbabwe or the Weimar Republic, neither the interest rate nor the chunk of cash will really make much difference anyway. At least we'll have a real asset in the form of a house.

5 months ago - 2 answers