Mortgage Interest Rates - A Look at the Last 10 Years of Refinancing

Ten years ago, prospective home-buyers and existing homeowners looking to refinance were positively giddy about the interest rates. Hovering around 8%, the rates were a refreshing change from the double-digits of the 1980s. Who could have guessed that now, in 2006, even with interest rates on the rise, we are a far cry from the "high" interest rates of the late '90s.

With the exception of a spike in 2000, the last several years have seen historically low interest rates. Under the direction of Alan Greenspan, the Federal Reserve Board lowered rates from 2001 through 2005. According to Interest Dot Com, the rate of 5.2% in June 2003 was the lowest rate recorded since their print predecessors began weekly rate surveys in 1985. These low rates enabled many Americans, who previously could not afford to do so, to buy homes. They also led many existing homeowners to refinance their mortgages and cash-out a portion of their home equity for home improvements or other goods and services. As stated by the Homeownership Alliance, the housing sector has been "a pillar of strength for the U.S. economy in recent years, limiting the depth of the 2001 recession."

This is true even with rates slowly on the rise. Since October 2005, rates have not dipped below 6% and the current rate is 6.66% for a 30 year fixed mortgage. The rates on adjustable rate mortgages are rising more slowly, thus providing an attractive option for those beginning to think about refinancing or taking out a home equity loan or line of credit.

What is the outlook for the future? Some experts say that the increases will slow, while others disagree, saying that rates will continue to rise. It seems we'll just have to wait and see.

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