I joked around 3 years ago that ultimately Ben Bernanke would push mortgage rates down to the 3% range - that was a tongue in cheek comment.  Lo and behold, it truly has happened.  Probably as amazing, is historically low rates all year the housing rebound bulls have been speaking of for 3 years, has yet to materialize.  I contend we are still years away.  That said, all this refinancing (for those who can) is extremely beneficial to cash flows.

  • Consider a homeowner who owes $250,000 and is paying 5.09 percent on a 30-year fixed mortgage. That was the average rate being offered in January 2010. Refinancing the loan at 3.94 percent could save him or her more than $2,000 a year.  But many homeowners with good jobs and stable finances have already refinanced over the past year.

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  • The average rate on the 30-year fixed mortgage fell to 3.94 percent this week, the lowest rate ever. For those who can qualify, it's an extraordinary opportunity to buy or refinance.
  • Mortgage rates could fall even further now that the Federal Reserve plans to reshuffle its portfolio of securities to try and lower long-term rates.
  • On Thursday, Freddie Mac said the average rate on a 30-year fixed mortgage dropped from 4.01 percent last week, the previous low. The average rate on a 15-year fixed loan, a popular refinancing option, dipped to 3.26 percent, also a record.
  • Still, rates have been near historic lows for more than a year and have done little to boost home sales. Many people don't have enough cash or home equity to get a loan, or they are reluctant to take the risk in this market.
  • This year is shaping up to be among the worst for sales of previously occupied homes in 14 years.

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Considering the drop in rates, yesterday's data in purchases and refinances is (to over use the word) amazing.  One would think refinance activity (if not purchasing) would be flying.

  • The MBA said overall mortgage application volume was down by a seasonally adjusted 4.3% from the prior week.  Refinance applications were down by 5.2% from the prior week, while home-purchase apps were down by 0.8%, according to the MBA.

Also we haven't heard anything in the past month about the program floated to refinance every American with a government backed loan to these new rates.  [Aug 26, 2011: White House Considering Plan for Country Wide Refinance of Government Backed Mortgages]  Hmm...