Sudbury MA Real Estate

Homeowners rushing to refinance mortgages

Federal Reserve’s surprise rate cut sparked a refinancing boom

NEW YORK - This week’s surprise rate cut by the Federal Reserve not only held Wall Street and investors in thrall, it’s also kicked into high gear a rush by homeowners across the country to refinance their mortgages at today’s lower rates.

Thirty-year fixed-rate mortgages now carry an average interest rate of 5.57 percent, down from 5.75 percent last week and from 6.32 percent a year ago, according to a Bankrate.com national survey. That’s bringing them within shouting distance of the historic low of 5.21 percent set in June 2003, when the housing sector was expanding quickly and there was a stampede of mortgage refinancings.

The Fed’s unexpected reduction of the overnight bank lending rate by three-quarters of a point to 3.5 percent this week doesn’t necessarily mean mortgage rates will drop by a similar amount. Mortgage lenders tend to peg their rates instead to the yield on the 1-year Treasury note or 3-month London Interbank Offered rates.

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