Minnesota Mortgage Blog - MN Mortgage and Real Estate News

Minneapolis / St Paul, MN: - Mortgage rates were supposed to go up this spring, but they're doing just the opposite.

Six months ago, nearly all the experts thought mortgage rates would climb this year once the FED Stopped artificially holding up the market by buying mortgage backed securities. But the opposite is happening. The average 30-year fixed-rate mortgage charges a mere 4.78%, according to the May 27, 2010 weekly survey from Freddie Mac. The European debt crisis and other economic troubles have sparked a flight to safety in the bond market that is driving investors to U.S. Treasury securities, driving up bond prices and thus reducing interest long-term fixed mortgage rates.

How long can they stay this way?

After all these years of pretty low mortgage rates, you’d think that everyone who could save money by refinancing would have done it. But no, refinancing continues to account for a very high level of overall mortgage applications.

If you’ve thought about refinancing but put the idea on hold for a while, you’ll need to start pay attention. Mortgage expert Joe Metzler, of Mortgages Unlimited in St Paul, MN says refinancing is starting to explode again as "rate are at a six month low." He says that more than offsets the drop in home sales caused after the federal homebuyer tax credit expired.

Purchase applications are down. New construction applications are also down since the expiration of the first time homebuyer tax credit. So, if we do see rates drop to 4.5 percent, we could see that make up real easily in refinance applications versus the purchase applications.

Low rates give homeowners a chance to reduce their monthly payments. But rates have been below 6% for a very long time. Why hasn’t everybody refinanced already?

Some homeowners have procrastinated, others figured they couldn't refinance based on all the things they thought they knew about today's mortgage lending market. According to Joe Metzler, "it is worth it for most people to refinance", and that "many people can drop to a 20-yr, or 15-yr loan, with payment similar to their existing loan." He also says "that while the mortgage industry has changed, lenders are still lending, and everyone should at least inquire."

Refinancing always can make a lot of sense for the homeowner expecting to have the new mortgage loan long enough to pay off the costs of taking out a new loan. Using a Refinance Breakeven Calculator can help with that decision if you’re thinking of moving from one fixed-rate loan to another.

Joe Metzler of Mortgages Unlimited, is a Certified Minnesota Mortgage Specialist, and originated home loans in MN and WI only. Visit him online at www.JoeMetzler.com for all your home financing needs