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 rock-bottom rates.

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 total.

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 rates.

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.