Interest rates at historic low

AUSTIN (KXAN) - Interest rates are at an all-time low, but it turns financial experts are not seeing a rush to refinance.

While interest rates fluctuate, it currently sits around 4.5 percent. Yet, thanks to the economic crisis, not many homeowners are refinancing.

Michael Ikeya bought his home in Oak Hill two years ago.

"We bought it right at that point where people were starting to move away from their asking prices," said Ikeya.

However, with interest rates at an all-time low right now, he looked into refinancing his mortgage and found he could save some money.

"We're looking somewhere around $125, $150 per month," said Ikeya.

"It is unheard of that rates are this low," said Mark Sprague, with Mission Mortgage . "They are the lowest since 1950."

Sprague keeps a close watch on interest rates.

"We've never seen the ability to buy a house as affordable as it is today," said Sprague.

So, you would think homeowners would be rushing to refinance with rates around 4.5 percent, but that's not the case.

"Last year, we saw a vast majority of those refis hit the market because we didn't think rates would get lower," said Sprague.

Mix that with many homeowners owing more on their mortgages than their home is actually worth has led to very few taking advantage of the low rates.

Here's an example of how much money you could save:

• A mortgage of $200,000 financed at a 6 percent interest rate would have a monthly payment of $1,199.
• If you refinance at the 5 percent interest rate, your mortgage drops to $1073. That's a savings of $1,500 per year and $45,000 throughout the life of the loan.

"If you haven't refinanced in the last five years, you need to talk to a mortgage professional," said Sprague.

For Ikeya, he's happy he did, and he rolled the closing costs into the overall mortgage and was still able to save some cash every month.

"If I'm paying less right now, that's an important thing for me," said Ikeya.

If you're uncertain about your eligibility to refinance, it is free to talk to a mortgage broker and have them run your numbers.