After the mortgage interest rate dropped to a very low rate below 5%, the 30 year fixed mortgage rates has bounced back from 4.96% to a (still) attractive rate of 5.12%. Compared to the 6.46% in late October 2008, the current rate still attracts refinancing rush.

Despite the slightly climb from last week’s rate, the demand for reverse mortgage is still increasing. According to the Wall Street Journal, this is due to the drop of retirement savings during the recession. Baby boomers with not enough savings are using home equity to fund their retirement. Although it is one way to help them make their ends meet, it is highly recommended that this kind of decision is delayed as long as possible as the fees are quite high. In some cases, consumers are expected to pay a high upfront cost of $15,000 and even more in addition to the monthly costs and interests.

Due to the high fees, if you are not planning to live in your homes for at least a couple of years, it is best not to use home equity loans.

The mortgage rates in 2009 is predicted to be somewhere between the 5.5-6% range and at the end of 2009 may go slightly up between 6-6.25%. If the current global economy improve earlier than predicted the rates may become higher.

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