It's true: Interest rates on home loans have fallen to new lows for this year. In fact, rates have declined so dramatically that many homeowners are taking advantage of the opportunity to lock in a low fixed rate on a new mortgage.
“Today’s rates are some of the best we’ve seen all year, so for those borrowers looking to purchase a home or refinance a mortgage, now is the time to take action,” says LendingTree Chief Economist Cameron Findlay.
Rates have dropped largely due to the federal government's latest billion-dollar initiatives to support small-business and consumer lending. The government's programs were intended to lower the cost and increase the availability of home mortgages. So far, they appeared to have worked brilliantly, at least as far as mortgage interest rates are concerned.
Treasury Secretary Henry Paulson, who announced the government's initiatives last week, said in a statement that nothing was more important to a housing recovery than the availability of home loans.
How you can benefit from low mortgage rates
Low mortgage rates can benefit both home buyers and homeowners, especially if they have at least moderately good credit and a small down payment or some equity in their home.
● Home buyers can take advantage of low mortgage rates to qualify for a mortgage, make lower monthly payments or borrow more money.
● Homeowners who refinance can lower their monthly payments or trade out of an adjustable-rate mortgage (ARM) into a loan with a fixed rate. Rates on 30-year fixed-rate loans have fallen as low as 5.5 percent for some borrowers.
“For those who have an adjustable-rate mortgage and a reset in the near future, now would be a great time to lock in a fixed-rate loan. Peace of mind and lower monthly payments should be great incentives to help these borrowers make the switch and find a loan they can afford," Findlay explains.
Interest rates change daily and it's impossible to predict how long today's low rates may last. That means borrowers who've waited to buy a home or refinance might not want to wait any longer.
“Last week's drop in rates is proving to be a great opportunity for consumers who were on the fence,” says Findlay. “Shop around and make sure you do your homework. If you are a borrower in good standing who wants to refinance, the ball's in your court.”