Rates Remain Stunningly Low; Where is the Refi Boom?

30 Year Fixed Rate Loans at a Cost of One Point: 4.375%*

Rates remain amazingly low, as the economy remains surprisingly sluggish amid fears of a "double dip" recession. Again, these low rates are a shock b/c so many analysts expected the economy to revive by now and they expected inflation to surface by now b/c of the increase in the money supply.

With rates this low, it is also surprising that there is not a huge refinancing boom taking place (one that might stimulate the economy). But there are three reasons we are not experiencing such a boom: (1) many people paid points to refinance into low fixed rates during the last dip in rates, and they are happy with their current rate; (2) many borrowers no longer qualify for any type of financing under the new, far more stringent guidelines; and (3) many borrowers simply lack the necessary equity.

These low rates are a huge boon to our many first-time buyers. A 1/2 per cent rate reduction lowers the monthly payment on a $300,000 home by $90. This may seem insignificant to many of you, but to our first- time buyers squeezing into a home, that $90 is like winning the lottery.

Jay Voorhees and Heejin Kim at (925) 855-4491.