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Mortgage-Rate Drop Sets off Refinancing Rush
The biggest rate drop in seven years sends homeowners to banks looking for deals
By Jim O'Neill
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Posted Nov 26, 08 8:30 AM CST
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(Newser)
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The biggest one-day decline in mortgage rates in 7 years set off a frenzy of refinancing yesterday, as homeowners who'd been waiting for a bargain jumped into the market. The nearly one-point decline was prompted by the Fed's $600 billion commitment to buy mortgage-backed securities, reports Bloomberg. "It's the folks who have been sitting on the sideline,” said a Bank of America exec. “They're jumping in with this news."
Economists praised the Fed’s move, which helped drop the average 30-year mortgage rate from 6.38% to about 5.5%, one saying it "may hasten the day when we finally find a bottom in housing.” Some brokers told the Wall Street Journal it was the most activity they've seen in a year. To qualify for lower rates, consumers will need a credit rating above 720 points and have at least 20% equity in their homes.