Low Rates Finally Spark Refinancings

After months of hovering near 50-year lows, mortgage rates have fallen even further, into uncharted territory and to a level lenders say is finally igniting more homeowner refinancing. The average interest rate on new 30-year fixed-rate mortgages was 4.44% for the week ended Thursday, according to mortgage giant Freddie Mac, which said mortgage rates were lower at than anytime since it began tracking them in 1971. This week's rate was down from 4.49% a week earlier and 5.2% in early April. For weeks, economists have puzzled over why falling mortgage rates haven't ignited a wave of refinancing activity. But mortgage bankers said borrower interest was finally picking up. "We're flat out busy," said Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn. One reason activity could grow stronger is that today's rates are not only lower, but refinancing has become cheaper. That is because investors have begun paying more for mortgage bonds than in the past, enabling lenders to use this additional money to cover some refinancing costs that borrowers would traditionally bear.

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