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Mortgage Rates Hit Three-Year Low

September 28, 2001
American consumers are hunkering down to face an unpredictable future, with predictable results: as consumer confidence falls and stock prices head south, interest rates are close behind.

The result: the lowest mortgage rates since October 1988. Bankrate.com reports that its national survey of large lenders finds the 30-year fixed rate hovering around 6.70 percent.

Meanwhile, the Mortgage Bankers Association reported a 20 percent jump in mortgage applications last week but analysts say the increase doesn't mean consumers are shopping for new houses. Nearly all the applications came from homeowners looking to refinance. While that may prove beneficial to them, it doesn't do much to lift the economy out of its slump.

Indeed, bad times can be good times for bargain-conscious consumers. With home sales at a near standstill in most markets, it should be possible to negotiate attractive prices on new and existing homes.

Likewise, crafty shoppers with good credit should be able to lock in some very attractive mortgage rates. This would be an ideal time to shop for a 15-year, fixed-rate mortgage. Paying off a loan in 15 years instead of 30 saves many thousands of dollars in interest and locking in a fixed rate now will keep your payments low when the economy snaps back into high gear.

Places to shop for a mortgage on the Web include Bankrate.com, Interest.com and LendingTree.com. Don't overlook mortgage brokers in your community, who may also be able to find rates not available on the Internet.

Don't feel rushed. This is not the time to take the first deal that comes along. Sad as it may be, the current downturn is likely to last a while. The latest report from the Conference Board fines the consumer confidence index at its lowest level since January 1996. Its most recent plunge was the biggest since the runup to the Gulf War in 1990.

Respondents to the confidence poll said they were pessimistic about the present and the future, which does nothing to inspire confidence in a quick turnaround.

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