Copyright 2010 The Palm Beach Newspapers, Inc.All Rights Reserved Palm Beach Post (Florida)
June 25, 2010 Friday FINAL EDITION
SECTION: A SECTION; Pg. 1A
LENGTH: 453 words
HEADLINE: Mortgage rates hit record low, lift incentive to buy, refinance
BYLINE: By KIMBERLY MILLER Palm Beach Post Staff Writer
Mortgage rates fell to the lowest level on record this week, adding an incentive for home buyers as sales slumped in May, and making a refinance more attractive.
The average rate for a 30-year fixed loan declined to 4.69 percent, from 4.75 percent last week.
It’s the lowest since Freddie Mac began tracking rates in 1971. The previous record of 4.71 percent was set in December.
“If someone has the ability to refinance or purchase, absolutely, now is the time,” said Scott Tennell, broker owner of Continental Capital Funding in Royal Palm Beach. “The interest rates themselves have really helped home affordability.”
May sales of new homes, however, took a 33 percent dive nationwide compared with a rally of purchases made the previous month to meet the April 30 deadline for the home-buyer tax credit. Sales of existing homes nationally dipped 2 percent in May compared with April.
Jack McCabe, of McCabe Research and Consulting in Deerfield Beach, said he’s not sure the interest rate drop will be enough to spur sales.
The Mortgage Bankers Association’s index of mortgage applications fell 5.9 percent in the week ending June 18, McCabe noted. “Come August, sales numbers will drop in Florida like a lead balloon,” he said.
Interest rates have fallen the past couple of months as investors worried over the European debt crisis and an unstable stock market put money instead into U.S. mortgage-backed securities, Tennell said.
Rates on 15-year, fixed-rate mortgages fell to an average of 4.13 percent, the lowest on records dating to September 1991 and down from 4.2 percent a week earlier.
Rates on five-year, adjustable-rate mortgages averaged 3.84 percent, down from 3.89 percent a week earlier. That was also the lowest on Freddie Mac’s records, which date to January 2005.
Given the costs, some mortgage experts say refinancing can be worthwhile if you can shave at least 0.75 percentage point from an existing rate. Others suggest waiting until you can lower your rate by at least a point.
For Florida homeowners, many of whom bought during the real estate boom and now owe more on their loan than their home is worth, refinancing may not be an option under traditional means.
The federal Home Affordable Refinance Program allows some underwater borrowers to refinance, but caps the negative equity allowed, limiting it to people who owe up to 25 percent more on their loan than the market value of their home. The program is available through June 2011.
Also, homeowners must consider closing costs that accompany refinancing. Appraisal fees, title insurance and state documentary stamp taxes can total about 2 percent of the amount of the loan.
The Associated Press contributed to this story.
NOTES: Lowest rate since 1971 The average rate for a 30-year, fixed-rate home loan fell to an all-time low of 4.69%Real estate insights Check our blog and other stories on the housing market. PalmBeachPost.com/realestate
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