Home loan modification just got a little bit harder as mortgage rates continue higher.  The entire point of modify a home loan is to get a lower rate which, in turn, would lower your mortgage payments.  Many home owners who have been attempting to get a home loan modification are doing so to avoid foreclosure.  If they cannot make their current payment and need to find a way to lower that payment to something more managable, modification was the way to go; now it may be a little bit different.

With rates shooting up almost a whole percentage point, it is going to be very difficult to find funding for a home loan modification.  Even if there is funding out there, the rate you are likely to get will be well above what was possible three or four weeks ago.  Many Americans that bought during the bubble of the early 2000s already have a home loan with a rate between 5.5% and 7%.  Now that mortgage rates have gone up, this is likely to be the same rate you would get today.  In essence, there is no point in even going through the process.

The mortgage rates forecast is very clouded right now as mortgage rates and the 10 year treasury rate have not been trading in the same overall trend.  Mortgage rates had been heading lower for most of 2009 while the 10 year treasury rate was trading higher.  This makes it very difficult to predict where rates are headed.  If mortgage rates and the 10 year do come back to their strong correlation, it is likely that mortgage rates will stablize as the 10 year treasury rate hit resistence at 4% and has pulled back.