There are few real estate economists more respected than Mark Dotzour, chief economist of the Real Estate Center at Texas A & M University. He says the time to refinance is now, and that there may not be a better time for 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."

Dr. Dotzour says the reason mortgage rates aren't higher is that the fear of a global collapse of the banking system is greater than the fear of inflation. The world's bond investors, he says, are moving their money into U.S. Treasury bonds. That's why mortgage interest rates have remained stable at about 5.75 percent on a 30-year fixed rate with good credit.

When investors are scared, there's a Wall Street phenomenon called the 'flight to quality.'

The United States is perceived as a haven of safety, says Dotzour, and that's why treasury bond investors 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 again, perhaps substantially.

So what should you do? If you own a home and you believe that we are in for a global financial collapse, then don't refinance. Interest rates will continue to fall," says Dotzour. "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."

As far as buying goes, that's up to you, but now is as good a time as any. Sellers have lost 15 to 20 percent of the market -- first-time homebuyers and investors who were using the easy exotic loans to finance their purchases. That could mean that housing prices have further to fall. Inventories are already at 9.6-months on hand, as of December.

If prices fall, and mortgage interest rates rise, buyers may surge before rates go even higher. That could stimulate first-time homebuyers who are waiting for the green light to buy. Anyone still on the sidelines would then be facing higher prices and higher interest rates.

Published: February 15, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.