Near-Record Low Mortgage Interest Rates

Good news today for Americans looking to finance the purchase of a new home or refinance an existing mortgage. Interest rates on 30-year fixed-rate mortgages fell to near-record lows in the wake of Federal Reserve Chairman Ben Bernanke’s unprecedented announcement yesterday that the U.S. Federal Reserve will keep short-term interest rates near zero for the next two years or so.

While yesterday’s startling announcement was seen by some as a desperate attempt to avoid a meltdown in the equities market after last week’s downgrading of the U.S. government’s debt rating, others see a housing market-oriented motive. By pledging to maintain near-zero short-term interest rates through mid-2013 the Fed’s move could mean lower mortgage interest rates over the long-term, and spur more home building and purchasing activity.

Mortgage Refinancing Activity Jumps

The historically low interest rates have kickstarted stagnant mortgage refinancing activity, as well. The Mortgage Bankers Association said on Wednesday U.S. applications for refinancing jumped 30 percent last week, as the average 30-year mortgage rate it tracks slipped to 4.37 percent from 4.45 percent in the prior week.

Stay tuned, this could be a very interesting week!