Mortgage rates have sunk to the lowest level in more than five decades, but consumers aren’t rushing to refinance their loans or buy homes. Mortgage company Freddie Mac says the average rate for 30-year fixed loans sank to 4.58 percent this week.

That’s down from the previous record of 4.69 percent set last week and the lowest since Freddie Mac began tracking rates in 1971.

Rates have fallen over the past two months. Investors wary of the European debt crisis and the stock market have shifted money into the safety of Treasury bonds, driving down yields. Mortgage rates tend to track yields on long-term Treasurys.

Tighter lending standards have made it difficult for many borrowers to refinance. Many who do qualify have done so over the past 18 months.

Why refinance when you have 5 years of paying mostly interest charges to only start all over paying mostly interest charges. It is the dumbest thing to do period. The object of a Mortgage is to pay it off not lower you payment to pay a ton more interest………think about it.

On the other hand what an excellent rate for the lake house plans. Remember, you cannot take it with you!

Bob… don’t let the issue of mostly interest being paid in the beginning of a mortgage blind you from the fact that a lower rate will decrease your payment… and you can do that without adding on years. So, why wouldn’t someone refinance to a lower rate, get the increased deduction on mortgage interest and lower their payment. It’s a no lose proposition.

Bob is correct, you don’t have to refinance for 30 years-negotiate with the bank to pick up the remainder of your loan at the new rate with the same number of remaining payments

How can this be a 50-year low when they have only been tracking rates since 1979. Is this a 31-year low?

Bob,

For those of us who don’t have a degree from Omaha school of finance, please explain why this is a bad idea? Take a $200,000 loan at 6% for 30 years…interest is $231,670 when the loan is paid off. Now refinance for 4.5%. Interest goes down to $164,809 and your monthly payment drops down to $1013. Now take that $187 you saved per month, and use it to pay down your principal each month, and the interest drops to $114,384, and you pay your 30 year loan off in 22 instead. Even if you have been paying interest for 5 years, at 6% your interest paid would be around $58k. You still have $173,670 in interest to go – which is still more than if you started over with a lower rate and paid the minimum amount.

What you want to look for is to refinance to a lower rate AND a lower payoff schedule. You might be able to go to a 15 or 20 year loan and not change your monthly payments – maybe even save some money every month.

Bob (of Omaha), when you refinance, you’re not necessarily required to restart the amortization. If you were 10 years into a 30 year mortgage, it is possible to get a 20 year amortization on your new loan and the payment woudl almost definitely be lower.

Or better yet use the super duper low (<4%) 15 year rates to pay off the mortgage faster…

To me, it makes more sense to refinance at a lower interest rate and keep the monthly payment the same as before to pay off the mortgage faster.

One, this article is about two weeks out of date.

And two Bob of Omaha, if one were to refinance into a new mortgage with similar terms of maturity while continuing to pay the same amount they did on the previous mortgage they would likely knock YEARS off the payment schedule while saving 10’s if not 100’s of thousands of dollars in interest expense depending on the size of the loan and how much lower the new rate actually is.

Bob of Omaha – If you refinance at a lower interest rate you will be paying LESS interest over the term of the loan. So if I can save $50 a month for the remaining 15 years of my mortgage, that’s $600 a year or $9000 for the whole loan. Make sense to you now?

Bob of O-

Stupid people like you (that ironically think they are being smart) are why this country got iself into this real esate / mortgage mess. It is NOT stupid to refiniance at a lower rate- especially if you can do it at no cost and/or move to a shorter term note and/or simply pre-pay the prinicipal (basically pay the same monthly amount you were paying on the higher interest loan). Any reduction in interest is a good thing as long as you have two neurons to rub together.

Hey isn’t that great , now if the freakin banks would just let you refi life would be grand!!!

Wish we could refinance, but we bought right before the bubble burst, so our value has dropped about 30%, leaving us underwater. At least we are making our payments okay. The government is going to have to throw more money at this or the housing market will collapse, and I’m not normally a fan of buyouts. There won’t be a recovery in housing otherwise, and things are going to get worse with foreclosures due to the joblessness.

Many homeowners miss the point of refinancing into a lower rate. Don’t lower your payment. Make the same payment; get advantage of lower rate; which means more of your monthly payment goes to principal. You can save thousands of dollars and be mortgage free that much sooner.