Newspaper article St Louis Post-Dispatch (MO)

Today's Mortgage Rates Great for Refinancing

Newspaper article St Louis Post-Dispatch (MO)

Today's Mortgage Rates Great for Refinancing

Article excerpt

If you're thinking of buying a home or refinancing a mortgage, here's some advice for the day: Go for it.

Thirty-year, fixed-rate mortgage rates, about 7.5 percent now, are at their lowest level since October 1993.

Though there's the chance of further slippage, it certainly won't be much more, and you're probably best off going full speed ahead.

At least, get the process rolling.

Home sales are likely to be down about 6 percent this year from last year's strong results, and economic vagaries make it a buyer's market despite low mortgage rates.

At the same time, the volume of mortgage refinancing has risen more than 25 percent lately at many of the nation's financial institutions.

Play the interest rate forecasting game if you must, but keep in mind that even most economists are not all that good at it.

"The current 30-year mortgage is at a very, very low rate historically, and it would be foolhardy to think you can accurately predict what the floor will be on how low interest rates can go," said David Lereah, chief economist for the Mortgage Bankers Association in Washington.

"If you are seriously contemplating purchasing a home, this would be the time to lock in."

Despite recent comments by Federal Reserve Chairman Alan Greenspan pooh-poohing the likelihood of a rate cut, Lereah says he believes mortgage rates will slide to 7.25 percent or less because of a weakening economy.

David Berson, chief economist with Fannie Mae in Washington, predicted that rates could fall to 7 percent should the nation fall into a recession.

A look at the history of rates for 30-year, fixed-rate mortgages is worthwhile.

Rates got as low as 7.4 percent in 1972, but hit 18.45 in 1981. In 1993 they got down to 6.83 percent. But the following year, they rose to 9.2 percent.

When contemplating this year's rates, remember that they don't stay low forever and they do bounce around in cycles.

Too many people lose sleep over a mere quarter of a percentage point in mortgage rates, wondering when to lock in, and wind up paying more, rather than less, for their loan. …

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