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Rush is on to refinance as rates fall

Local lender: Rates might drop even

Last Edited: Thursday, 04 Dec 2008, 5:24 PM CST
Created On: Thursday, 04 Dec 2008, 11:06 AM CST

* Matt Flener

AUSTIN (KXAN) – Homeowners looking for a little help in this tough economy might just need to consider refinancing. Mortgage rates for a 30-year fixed loan were trading as low as 5.25 percent compared to last week?s near 6 percent, according to Bankrate.com . Mortgage companies jumped on the opportunity last week, calling homeowners and enticing them to take advantage of the deals.

Last week, the Federal Reserve announced that it would buy $500 billion in mortgage backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae. That helped drive down mortgage rates and led to a huge surge in refinancing activity. Federal Reserve Chairman Ben Bernanke talked about the government’s action Monday as he spoke before the Austin Chamber of Commerce. “It is encouraging that announcement was met by a fall in mortgage interest rates,” Bernanke said.

Lender John McClellan, of Supreme Lending, said homeowners are in a very narrow “window of opportunity” due to the Federal Reserve’s action. McClellan said he has seen rates as low as 5.125 percent for people with good credit. “From what I’m hearing, we may see rates dip down even further,” McClellan said.
Wednesday, the Mortgage Bankers Association released its refinance index, which tracks refinancing activity. It tripled to 3,802.8 last week from the week before.

Home investor Matt Worrall said he is waiting for interest rates to drop below 5 percent. “The bottom line for my family is the increased cash flow per month,” said Worrall. “I missed an opportunity six months, nine months ago when it went to 4.75 and I didn’t move and I’m not going to miss it this time.”

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