Fixed mortgage rates dropped to the lowest levels in 60 years Thursday, saving refinancing homeowners across the nation hundreds of dollars each month.
The average 30-year fixed rate mortgage fell to 4.12 percent from 4.22 percent, the lowest level since the 1950s, according to Freddie Mac. The average 15-year fixed mortgage rate fell to 3.33 percent, the lowest on record.
With rates that low, Michael Alfano refinanced his Missionary Ridge home at 4.1 percent, down from 6.7 percent, saving him about $700 monthly.
"I'd have rather sold my house, but if that's not happening this is the second best thing," he said.
Alfano's house had been on the market for two years without any bites. He had to take the home off the market to refinance, and with his new rate he expects he'll keep it off the market a little longer to avoid lowering his asking price.
Despite some of the most favorable mortgage rates ever, the housing market shows little sign of bouncing back. Over the last year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks. That compares with five years ago, when the average 30-year fixed rate was near 6.5 percent. Yet prices and sales remain unhealthy and are holding back the overall economy.
New home sales are on pace to finish the year as the lowest on records dating back half a century, with re-sales shaping up to be the worst in 14 years.
Still, the refinancing business has been busier than several Chattanooga mortgage brokers can remember. Tina Christein, manager of the local Churchill Mortgage branch, said her office has been staying open as late as 9 p.m. to handle the flood of refinancers.
"It's insanely busy," she said. "We're very excited about it."
It's impossible to tell when rates will bounce back up, so Christein recommends those thinking about refinancing do so as soon as they can.
"It's tough to say, but I have a feeling they'll probably hold to where they are for a short while, hopefully till the end of the year," she said.
But not everyone is able to qualify for the refinancing option they may want, as housing values have dropped with the housing market
"The thing that we're running up against is the appraisals," said Karen Barnett, manager of Chattanooga's Community Mortgage Corporation. "They just can't borrow as much as they want."
Still, Barnett said refinancing and even looking for first-time mortgages is worth a shot. With rates as low as they are, it's tough to imagine them dropping much lower.
"If you're looking at the rates and you lock, it's a gamble," she said. "I just don't have that kind of crystal ball."