Jonathan Carter

Last Chance To Refinance?

How low is low, and
When will a bounce be a reversal?

Watching interest rates, with a great deal of interest, are those that hope to lock into a fixed mortgage at the very bottom - grabbing the lowest rate imaginable.

Many experts felt that 2003 would be the year that the country's record run of mortgage refinancing finally lost steam.  With 17.4 million loan refinances in two years and the odds favoring mortgage rates to bounce off historic lows, that prediction seemed to make sense.  That is, until war fears helped drive rates to new 40-year lows in early March, sending the Mortgage Bankers Association of Americans refinance index surging to an all-time high.

So, should you be planning to refinance, or take a wait and see attitude for a 50-year bottom?

It is time to break out your calculator.  In February, Salomon Smith Barney's mortgage research department released a report estimating that an incredible 88% of outstanding home loans could benefit from a refinance. 

How?  Consider that a homeowner who locked in a 30-year loan last March at 7% could save hundreds of dollars a month in interest by switching to the current rate of 5.4%, even after fees.  Experts say homeowners should take a hard look at a refi if they can reduce their rate by even half a percentage point.

Those in adjustable-rate loans should consider locking in fixed rates, and homeowners in 30-year loans should think about switching to 15 or 20-year deals.  But have rates really hit bottom?

"I don't see them going much lower," says Freddie Mac chief economist Frank Nothaft.  If they do - you can always refinance again.