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Refinance your mortgage?
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November 14, 1996: 10:41 a.m. ET
Interest rates dropping, prompting 300,000 refinancings in past 3 mos.
From Correspondent Carmine Gallo
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NEW YORK (CNNfn) - Yields on the benchmark 30-year U.S. Treasury bond are currently running close to an eight-month low.
That's putting a smile not only on the faces of bond investors, but also of homeowners who have the flexibility to refinance their mortgages.
That's because the 30-year T-bond serves as a benchmark for all types of loans, including mortgages.
Lower T-bond rates mean lower mortgage rates, which can make mortgage refinancing a good idea for many U.S. homeowners.
Although mortgage rates are nowhere near the lows they hit in the early 1990s, they're low enough to spark a refinancing revival.
Some 300,000 Americans have refinanced a mortgage in the just past three months.
That's because long-term mortgage rates have fallen from a high of 8.5 percent in June to just over 7.5 percent today.
"With mortgage rates at 7.5 percent, (for) anyone with (an existing mortgage) rate of 8.5 percent -- most certainly 9 percent or more -- it would make economic sense for them to consider refinancing," said Warren Lasko, executive vice president of the Mortgage Bankers Association.
Homeowner Lynne Ronon has found a way to save close to $100 a month by refinancing the mortgage on her New York co-op.
She plans to use the extra cash to renovate her property.
Other homeowners use money saved through refinancing to pay off other debts, like credit cards.
Interest rates have fallen because the U.S. economy appears to be slowing, easing fears of inflation that can spark tight credit conditions.
Lower rates and resulting home refinancing are helping U.S. mortgage lenders have one of their best years ever.
The industry expects to make $800 billion of home loans this year -- the third highest annual showing on record.
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