How low can they go? 15-year fixed rates set new record

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Anyone out there still have the old-fashioned notion to retire their mortgage sooner rather than later?

Homeowners able to refinance were finding lenders offering 15-year fixed-rate mortgages at an average of 4.21% this week, according to Freddie Mac -- the lowest rate since the mortgage company started tracking the 15-year loan in 1991.

Heavy demand for 10-year U.S. Treasury bonds has pushed their yield to the lowest level of the year. That’s the typical benchmark for fixed mortgages -- and boy have rates followed, with Freddie Mac reporting the average for a 30-year fixed home loan falling to 4.78%.

That’s down from 4.84% a week earlier and not far from the record low of 4.71% set back in December.

Since the Freddie Mac survey reflects what lenders are offering, not actual contracts for loans, the rates obtained by well-qualified borrowers are often slightly lower, experts say.

Freddie Mac gathers information about rates available to well-qualified borrowers who make a down payment of at least 20% or have equivalent equity in their homes if they are refinancing. The borrowers in this week’s survey would have paid 0.7% of the loan balance to the lenders in upfront fees and discount points, Freddie Mac said.

Last year, the experts expected residential mortgage rates would be rising by now, as federal housing and home-loan support programs expired, home prices stabilized and inflation became more of a concern.

Then the latest default scare reared its head -- this time involving not U.S. home loans but the debt loads carried by Greece and other weaker European economies. And just like that, the flood of money began to the safe haven of debt issued by Uncle Sam.

‘Just when we thought we were finally experiencing [the anticipated rate increase] we got the PIGS,’ said Stew Larsen, head of mortgage banking operations for Bank of the West, referring to an acronym for the nations Portugal, Italy, Greece and Spain.

For those hungry for lower rates, is this the last big chance to head to the trough?

-- E. Scott Reckard