Home Mortgage Interest Rates at Lowest Levels – Good Time to Refinance?

Many homeowners who have not yet taken advantage of low mortgage interest rates are wondering just how low rates will go. “Is now a good time to refinance?” The New York Times reports, “The reduction in the federal funds rate from 4.25 percent down to 3.5 percent marked the biggest reduction in this target rate for overnight loans on records going back to 1990.”

Fed Rate Cutting Spree

In addition to cutting the funds rate, the fed said it was reducing its discount rate, the interest it charges to make direct loans to banks, by a similar three-quarters of a percentage point, pushing this rate down to 4 percent. Homeowners were prepared to seize what could be a once in a lifetime opportunity to slash home mortgage interest rates and save thousands in mortgage interest costs. Note the following fed rate cut history.

Fed Interest Rate Cuts In 2008

Jan 22, 2008 Rates were cut to 3.50%

Jan 30, 2008 Rates were cut to 3.00%

Mar 16, 2008 Rates were cut to 3.00%

Mar 18, 2008 Rates were cut to 2.25%

Apr 30, 2008 Rates were cut to 2.00%

That said rates are at an all time low. Who benefit from the recent Fed rate cuts? The historic January 2008 Fed rate cut produced telling headlines. “Fed Rate Cut to Boost Auto Sales – Chrysler CEO” “Asian Markets Ease Higher After Rate Cut” “Fed’s Action Stems Sell-Off in World Markets” “Gold Rallies on Fed Rate Cut”

How homeowners benefit from reduced Fed rates.

Those short-term rates track the Fed’s key interest rate and already have fallen over the past month in anticipation of a rate cut making mortgages more affordable. There are 2 primary reasons people refinancing their mortgage loan:

1. To take advantage of lower interest rate                                                                             

2. Convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.

Weighing Your Home Mortgage Finance Options

The refinancing option can be a good idea if the interest rate on your mortgage is higher than current prevailing rates especially if your mortgage carries an adjustable interest rate that has been trending up. Still some homeowners do well to wait to refinance. What if you have been paying off a home mortgage loan for 10 years or more? You will get better rates on 15 year fixed than 30 year fixed. Learn more best additional knowledge on how to compare mortgage rates, find best mortgage insurance rates, what about 40 year mortgage options, smart way in mortgage refinance rates. By Mark A. Askew