Speak Now or Forever Hold Your Loan
As of early September, 1998, mortgage rates have reached a
five-year low, and show signs of going lower still, making home
ownership more affordable for millions of Americans. Now is a
good time to consider refinancing your home to take advantage of
Freddie Mac reports that the average interest rate on 30-year,
fixed-rate loans dropped to 6.77 percent. If it falls below 6.74,
just another four hundredths of a percent, interest
rates will be the lowest they have been in 30 years.
What does that mean to the homeowner? Less household debt and
more money in the bank account. For example, on a $100,000, 30-
year fixed rate mortgage, the homeowner saves $400 a year for
every half percentage point that the rate drops. More homeowners
are refinancing to reduce their mortgage debt and take advantage
of the new low rates.
According to the Mortgage Bankers Association of America (MBAA),
mortgage loan applications last week were up 162 percent from the
same time a year ago. Refinancings made up 52 percent of the
Economists are calling the rates remarkable because they have
been so low for so long--13 weeks. One reason for the drop is
the recent international financial chaos. Foreign investors are
seeking safer U.S. Treasury securities because the U.S. economy
remains strong. The buying surge has caused Treasury rates to go
down, and mortgage rates tend to track closely with Treasury
In addition, fewer Americans are behind on their monthly mortgage
payments, another fortunate result of lower interest rates and a
strong economy--jobs are plentiful and mortgages more affordable.
Loan delinquencies fell to 4.33 percent during the first three
months of 1998, according to MBAA.