Mortgage Rates: How Low Can They Go? 4.21% for a 15 year mortgage…

Homeowners able to refinance and purchase this week 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 down from 4.84% a week earlier and not far from the record low of 4.71% set back in December.

With mortgage rates near record lows, homeowners are applying to refinance their loans at the highest rate in seven months. The volume of refinancing jumped 17% last week as the average contract rate for a 30-year fixed mortgage sank to 4.80% from 4.83% a week earlier and it was the highest volume since October.

In contrast to the latest refinance boom, applications to purchase homes fell further after a sharp decline the week before. The refinance share of mortgage activity was at 72% of total applications, up from 68% the previous week and the highest refinance in the survey since December 2009.

Industry observers said any home purchasers who could do so completed their transactions by the end of April, when federal tax credits expired for people buying houses.

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. "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?

Source: LA Times (Money and Company Blog)