Another chance at a fixed-rate mortgage?

Weekly average of 30-year fixed rate mortgages over the last 3 years (source: www.hsh.com).

Today’s sell-off in blue chips and the extended rally in Treasuries has potentially created another opportunity for variable-rate mortgage holders to convert to the fixed-rate variety. As can be seen by the graph above, mortgages rates below 6.00% are well in the past and we may not see those type of rates anytime soon. What we will see after today’s market action is that any loan which is indexed to the prime rate will not have the drop in rates that the longer term fixed rates will. Converting to a fixed-rate mortgage is an economic decision based on the value of your house, the expected length of time you expect to stay in your house, your tax sitaution and other considerations, but if one is evaluated based on interest rates alone - the fixed rate mortgage just became that much more attractive today compared to the peril implicit with many variable-rate loans.