Rates Hit 37 Year Low

If you've been paying attention this week you know that mortgage rates fell to some pretty impressive levels. For a few hours on Wednesday you could lock in a rate lower than 4.5%, which is certainly something I've never seen. Apparently I'm not the only one. This weeks average is the lowest since Freddie Mac began tracking it in 1971, so it's definitely a big deal.

The interesting thing is that the amazing rates seem to be confined to the 30 year fixed. I don't know why lenders even show the hybrid ARM rates anymore. Why get a loan fixed for three to five years if the 30 year fixed rate is more than a point better?

Even the 15 year fixed rate is no better than a 30 year in this market. 15 year rates are usually at least 1/2% better than the 30 year, but this week there have been days where the 15 was actually worse.

This may reflect the secondary market's aversion to anything that isn't a traditional 30 year fixed rate loan. The interest only, adjustable, negative amortization type loans that have been making all the headlines have soured investors appetite for anything out of the ordinary. When some of the more exotic loans started going bad investors fled to the more conventional.

Fortunately for us, the 30 year fixed really is the best loan for most people in most circumstances. This week the phones are ringing with people wanting to refinance into a lower rate. Hopefully this will also bring some new buyers into the market, but even if all it does is to save homeowners a lot of money it might end up being a much needed stimulus for the economy.