So, you think that just because the Federal Reserve cut its short-term interest rate to 3.5%, you'll refinance your mortgage for something close to that?
Think again.
The Fed's prime rate has little or nothing to do with home mortgage rates, which are based on the U.S. Treasury's 10-year rates. Still, depending on what your current rate is, there probably are savings to be had.
Timing is everything: calls to local banks today found rates down from where they were a few months ago -- but higher than last week.
Assuming good credit and the requisite equity, local bank rates are mostly below 6%. The best we found was at Wells Fargo, offering 30-year, fixed-rate mortgages for 5 5/8%. That's up from 5 1/4% a week ago. Johnson Bank quoted us 5.75% (plus a 1/4% "delivery fee.")
M&I Bank today is at 5.875%, but last Wednesday locked in a mortgage at 5.375%. Later that same day the rate jumped to 5.625%, and then went up again. Yesterday's rate was 5.75%.
The Bank of Elmwood this morning is at 6%; last week it was at 5.75%. One year ago, its rate was 6.5%; in 2005 it was 5.5%.
Last week, according to mortgage tracker HSH Associates, the average 30-year fixed loan in the U.S. was 5.55%, down from 6.4% shortly after the Fed's first rate cut in the fall. A story in the Houston Chronicle, quoting a Bankrate.com national survey, says the average is 5.57 percent, down from 5.75 percent earlier this month and from 6.32 percent a year ago. "That's within shouting distance of the historic low of 5.21 percent set in June 2003."
Keep in mind that what the Fed giveth, it also taketh away: lower interest rates for borrowers also mean lower rates for savers.
No comments:
Post a Comment